Raia Drogasil Adr Stock

Ladies and gentlemen, thank you for standing by, and welcome to RD Saude's Second Quarter of 2026 Earnings Call.

The slide deck can be found at the company's Investor Relations website at ri.rdsaude.com.br. This conference replay will also be made available at the website. [Operator Instructions]

Before we begin, we would like to inform you that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the company's management's beliefs and assumptions as well as on information currently available to the company. Forward-looking statements do not guarantee performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that overall economic conditions, the industry conditions and other operating factors may affect the company's future results and lead to results that differ materially from those expressed in such forward-looking statements.

Today, with us at the RD Saude studio are Mr. Renato Raduan, CEO; and Flavio Correia, Head of Investor Relations and Corporate Affairs.

I'd like to turn the conference over now to Mr. Raduan. Please go ahead, sir.

Hello. Good morning, everybody, and welcome to our second quarter earnings call. As always, it is a pleasure to be here with you to delve deeper into our numbers that I'm sure you have taken a look at already. And good morning, Flavio.

Hello. Good morning, everybody. Good morning, Renato.

I'll try to be brief in the beginning of the presentation, try to give you an overview of the figures and leave some time for Q&A.

Before we go into the operational details, I'd like to tell you that we are very happy with the second quarter results. They were very solid, very consistent both in absolute and relative numbers comparing our company against our previous results and the industry in general. We finished the quarter with 3,687 units. In 12 months' time, we will tell you that we reached 4,000 units next year. But so far, the number is 3,687. We opened 76 units and closed three. Our IRR is extremely healthy, and it is contributing to the results. Besides the expansion to 3,687 units, we have 53 million active customers in the last 12 months, almost 1/4 of the Brazilian population and 119 million tickets in the quarter with an NPS of 91.

Flavio, this number is part of the landscape at this point. It seems like nobody cares about this number anymore, but it is the reason why we have such a great performance per pharmacy. It is about the experience that the customers have, everything that we offer in terms of quality and service. It is the first quarter in which we have the three consecutive quarters in the year with an NPS north of 91. And that is also a signal that our plan is working in terms of improving the pharmacy staff, and that effort has been recognized by the customers. We closed the quarter with a growth of BRL 12.8 billion, 18.3% growth. And we should remember that last year, the GLP-1 sales put us in a very good position. We already had Mounjaro in May last year. So although the sales base was already very high, we were able to grow by 18.3%.

And in our mature stores, the growth was 10.9%, almost 11%, 8 percentage points greater than the CMED index and slightly more than our direct competitors. It was a very solid result in absolute and relative terms. 19.7% national market share, almost 20%. We're getting closer and closer to 20% with 170 bps more than last year. And last year, we had already grown by 170 bps in comparison with the previous year across all regions. So that's why this result, as I said, is very consistent and solid.

And as for digital, we reached almost BRL 4 billion, 55.2% growth and a penetration of 31%. I was actually doing the math. And of course, it is just a theoretical exercise. The digital side is so strong because of our brick-and-mortar presence. But if we were to split the digital from the brick-and-mortar operation, the digital operation would very soon be the first player in the [ other ]pharma industry. And I think that, that will happen in the near future. It's a very solid result. And that took us to BRL 1 billion in adjusted EBITDA, 18% growth with a stable margin of 8%. We were able to absorb a lower CMED inflation adjustment, and we were able to keep an EBITDA margin that is stable.

Our adjusted net income grew as well and the adjusted EBT also grew by 33.4%, which is good. But once your profit before taxes grows, what happens is that taxes will grow as well. We had to pay more taxes. Our free cash flow came to BRL 550 million with BRL 1.190 billion in total generation. And our financial leverage should be highlighted as well because it is the result of a reduction in our net debt and our increase in our EBITDA. Those two factors led to a reduction of 0.5 in terms of leverage.

Now I'd like to turn it over to Flavio. But before that, again, it is a quarter in which we grew very consistently by almost BRL 2 billion, going from BRL 10.8 billion to BRL 12.8 billion, an 18.3% rather quarter-on-quarter and year-on-year actually. And again, GLP-1 contributed a lot to this growth. But even if we were to exclude GLP-1 and private label, all the categories would have grown at about 13.5%. It is very stable, very healthy.

HPC, as you can see here, I told you in the last quarter that it grew by 12.8% but repellents and sunscreens had not sold so much because it rained a lot. And if we were to exclude that, the growth would have been 14%. And that's exactly what you can see here, the structural growth that I told you about. It's important to remind you of all of that because it builds credibility in everything that we tell you every quarter. So you can see that the growth was very healthy across the board, excluding GLP-1.

Now over to the next slide. Once again, you can see the growth of 18.3% overall and almost 11% in mature stores. We should remember, Flavio, that 11% in mature stores is important because we are already at a base that is higher than last year. And if you add a percentage growth on top of that, it means that our gap between ourselves and the competitors actually grew over the last 12 months. So congratulations, and thank you to the entire staff for your delivery, your hard work. The customers are recognizing your effort and the gap between ourselves and the competitors is increasing more and more. And also, we have an expansion engine that cannot be replicated by anyone, and that will continue to make that gap even larger.

Now let me give you some more details about these numbers. But again, this is old news. We gained 170 bps in market share across all regions. In Sao Paulo, 230 bps in the Southeast region as well, 140 bps. In the Midwest, 240 bps, not so much in the South. In the South, the expansion pace is a little slower. We're gaining less share there. And the Northeast and the North, we can see a 150 bps expansion. Those are all significant growth rates. That are not happening just in one or another region, but across the board around the country.

And here on this side of the chart, I would like to highlight this. Less than 40% of our pharmacy footprint is where everything started in Sao Paulo. We are a nationwide network. We're not just constrained to Sao Paulo. Most of our business comes from other regions in the country. And that is important because if we are to grow in the next 5 to 10 years, we already have strong brands and the way paved for our growth in the rest of the country. 60% of our pharmacies of our brands and teams and inventory located all around the country, which will allow us to grow around the country. And the competitors cannot do the same. We have 13% market share in the Northeast, 12% in the South, 14% in the Southeast. Of course, we are not going to reach 35% in those places overnight. But look at what happened in the Midwest, 25% share already. So we have a great possibility of growing all around the country with the assets that we've built over the years, which our competitors cannot do.

Another thing that I'd like to remind you of is that our EBITDA includes 25% of the stores that are not mature yet, that are not at their optimal level of revenue generation. So we need to take that into account as well. If 90% of the stores were mature, our EBITDA would be higher than that.

And now I'd like to turn it over to Flavio, and I'll come back later.

Hello. Good morning, everybody.

Well, let me give you some more details about the digital business. It is a huge success, very consolidated. This is an activity that generated BRL 3.9 billion in revenue this quarter with a 52% year-on-year growth. So although it accounts for 30% of our sales, it's still growing with 52% growth year-on-year. That's very positive, not only on quantitative terms, but also qualitative terms as well. We have our proprietary channel, the app, consolidating 80% of our digital sales. And that also comes from our operating strength with 96% of the deliveries being performed in less than 60 minutes, less than one hour. That is an undisputed strength for us. If you put that together with an 81 NPS and with the access that our customers have to our website and app with 1.1 billion visits, that takes us to this incredible success and solid numbers.

Now when it comes to gross profit, we came to 28.9% in a percentage of our gross revenue, and it consolidates our operating resilience. Here, we have sales gains and lower losses, and they almost offset the negative points because we had a higher share of GLP-1 in our sales this quarter. The CMED rate was 30 to 40 bps lower than last year. So it pushed our results a little lower, but we have our operating strength, which almost was able to offset the lower points coming from last year.

Now let's take a look at the expenses. Our selling expenses came to 18.6%. We have been talking about that for a few quarters now, right, Renato. We have been talking about how we have been working with our results. The top line can grow by 18% because of the strength of our brand and operations. And in the recent quarters, we decided to propose a different employee value proposition to our staff, and that took our expenses to a higher level, but it can deliver the results that we expect to deliver to the customers. So we are making investments here. It's not really about expenses. And this amount is higher, but it was also diluted by the higher revenue generation that we had this quarter and the year for that matter. And the weight of our EVP also led to an increase in our last mile due to the digital penetration and also the third-party services. But those effects were minimized by an improvement in the lease costs.

Now let's take a look at the G&A expenses. This is a big strength that we have. We changed the structure last year and we have already captured the effects. We did so in the second quarter last year, we were able to cut off almost 40 bps in G&A expenses in 2025. And now in 2026, we are also capturing another 30 bps due to our solidity in our management of expenses in the company as a whole, but also because of the dilution coming from the growth in our sales. So this result makes us very happy about the performance this quarter.

And our EBITDA margin came to 8%, which is stable. But when we look at the absolute numbers, we can look at the financial result growing by 18% year-on-year, which is very solid. In 2026, things have been very challenging for retail as a whole. And the second quarter, when we look around to other retail segments, things have been very tough, but our bottom line is growing by 18%, which is just another way of showing how solid we are. We also have a cash flow that has been very positive if we're looking at this year-on-year, and they're mostly coming from our line of vendors.

We have gained 11 days in terms of gains, and we have two different effects. One of these effects is coming from the ICMS taxes, the drop that we saw in this type of tax in the state of Sao Paulo. So these results in terms of taxes are now coming back to our numbers, and this represents about half of the gain that we had in this vendor line, the supplier line. The other part of this is about our commercial and operational fortress, the negotiations in our trade business, commercial business, et cetera. So this is a very solid result, and it is structural. There are, of course, some standouts because of our half. But if we remove this question, then this should be able to be kept throughout the next cycles.

Thinking about financial expenses now, we have expenses that have dropped 40 bps year-on-year. So this is a very low number if we compare it to our historical numbers. Of these 40 bps, 30 of them are coming because of a decrease in our debt, our total debt and because of a decrease on the costs that we face of selling those services. This is 3/4 of the financial expenses. And then we have 3 bps that's about receivables because of the 4Bio sale. This is something that helps us structure everything else, and we will be seeing effects on this for the next five, six years because of those receivables. This is going to be recurring results for us from now on.

When we take a look at our EBT, we see that this is very good information. We are getting to BRL 542.7 million in this quarter. It is a growth of 33% over the same basis of last year. It's a very solid growth, again, 40 bps year-on-year.

Now if we take a look at other details that Raduan had talked about, we had the low light of the results, which is about the increase in taxes that we're paying. We're generating more revenue, which means we're going to pay more taxes. There is taxes in absolute numbers that increased by BRL 60 million year-on-year. We landed at BRL 118 million. And the growth of this is about the EBT that grew along the way and the JCP that's proportionately a little bit lower than last year if we think about the interest on capital. We saw this in 2025, but it's not as strong in 2026. This was a result that we were expecting. We were not caught off guard by this. But of course, this is low due to the increase in the overall number. So we came to an adjusted net income of BRL 432 million with 3.4% on the gross revenue, which is a very solid result.

Now if we exclude the 4Bio results from our basis this year and last year, we saw a percentage that is being kept year-on-year, but with a basis that is increasing quite strongly year-on-year in absolute numbers, in terms of cash, again, very positive. We read a lot of the analyses that were created overnight. And one thing that was mentioned over and over again, and that is quite positive is our generation of cash flow for the period. We have now a very solid number with BRL 880 million total after investments and then before BRL 550 million. When we add that to the situation of the sale of 4Bio and those receivables, we are now looking at a total number of BRL 1.190 billion in terms of total cash for this period. This is a very strong number. We can't say that it's a surprise number, but it did surprise many people, nonetheless. So we are evolving our debt that is going from BRL 3.99 billion to BRL 3 billion. We are looking at a very impressive reduction, which comes to about a BRL 1 billion reduction, meaning our leverage goes from 1.3x to 0.8x the EBITDA. So that's another very positive number.

And with that, I would like to give the word back to Raduan.

Now before questions and answers, we try to anticipate some of the questions that might arise. So we wanted to tackle those. I would say that sometimes there is a bit of apprehension regarding the future of GLP-1. And honestly, we are in this sector, we are managing this, and we are not apprehensive. We're not as apprehensive as the market seems to be, and the numbers really are on our side in terms of this lack of apprehension. So let me get down to this. I just want to use data that can be reported right now before July. But the average added price of GLP-1, this is always -- I'm sorry, I lost my point. Okay, here we go. I'm just going to go through this slowly so that we make clear some questions.

If we look at GLP-1 in the first quarter, we had the average price -- sale price of all the ingredients and our revenue. We see that the second quarter showed a decrease in average price of 7%, but there was an added volume that made up for that, which means that our gross revenue increased. So even though there was this decrease in price, we did have an increase in volume. If we break this down between semaglutide and tirzepatide, we see that semaglutide is where we are looking at the generic medication.

Now the average consolidated of the whole quarter, if we think about the three months, average price went down by 22%, and that was integrally offset by this volume that I'm talking about, meaning that it brought us to the same gross revenue with an important caveat here. It composed this gross revenue even with restrictions and an issue with inventory. If we had been able to rely on unrestricted availability of all options, then this would not been 100. It would have been more. So right now, we're looking at semaglutide, it is an offset that is happening between this decreased price with the increased volume, which is leading us to similar revenue. And that's for now. I think, of course, competition will increase, which means our gross margin will increase as well.

And then on the other side, we're looking at tirzepatide that showed a small decrease in the average price. I think there were discounts and incentives. There's a mixed effect. Sometimes you sell at a discount, but you have a more expensive presentation. We're looking at an average price of 100, but volume grew by 12%. So in terms of quarter 1 to 2, again, that decrease in price generated more revenue because of the volume. The second thing, which is, I think, even more important is what we see over here. You know because of data from the market and we read your reports, there are good estimates that approximately 70% of the market is tirzepatide. And tirzepatide is completely bulletproof in terms of this loss of patent in the short term and from generics. Its price is going to be kept.

The challenge of tirzepatide is about how you attract the parallel market and then you take care of the black market and you want to make sure you migrate those clients to us, we see that if we bring some elasticity, we will get demand. And then semaglutide, which is 30% of the market, which is where the price is dropping, but being compensated by volume. I said this during the last call, and this is something that we've been very transparent about. GLP is about 12% for us. And in the second quarter, GLP had a higher share than in the first quarter. So again, higher in the second quarter. Of those 12% that I mentioned, we're saying that semaglutide is about 30%, then it's about 3.5% of our total revenue that is resting on semaglutide. 8.5% is on tirzepatide. Those 3.5%, as we know, they don't operate at a margin of 30%. They're operating at a gross margin of 18%, so the contribution of semaglutide of our revenue in general is about 2%. I think this will keep.

I think that competitiveness will improve our gross profit based on what we see in other countries. Even if that doesn't happen, we're saying that this 2% could be 1.8%, 1.7%. Sometimes we may be projecting a doomsday scenario because of prices and competition. But again, we are thinking about a 2% ballpark number of the contribution of our gross profit in the company. It has shown to be elastic, and it's not going to be deteriorated further with competition with new products. We are going to see this being kept. And again, tirzepatide is bulletproof. There's very little migration from tirzepatide to semaglutide because of a lower price.

There is legitimate concern, of course, but we have to put things into perspective in terms of how much that is applied. We have been focusing a lot on this, but I was just trying to give you some perspective of the impact. And we are not looking at tirzepatide enough, which is going to keep its patent for a long time. There's a lot of market to gain of the parallel informal market. And in addition to that, we will have other ingredients. We are going to have oral medications coming in. There's a lot of innovation, a lot of growth that we are projecting for GLP-1 as a whole, and that is very significant. We do, do multiyear exercises. We look at pessimistic, optimistic scenarios, realistic scenarios, but even the most pessimistic one is predicting a destruction of GLP-1 value in the future. We may be wrong, of course, but we are much more optimistic in terms of GLP-1. So having said that, of course, you are welcome to ask any questions about this.

Another very important point here, and I want to talk about it further is the strength of our digital channels and how much that has become a fortress to us. This is a tool that is helping us accelerate our gain in share, but it is a defense tool that is very important for new players and digital players that may be coming in. We have 11.8 million of our clients that are digital, and these 11.8 million represent about 41% of our sales. Very soon, half of our sales are going to be coming of digitalized clients that sometimes buy online and sometimes buy in person. Of course, we've been able to create this digital fortress because this is sitting on a very important physical structure that creates a unichannel that it is one single asset and platforms that don't have their brick-and-mortar cousins can't do that.

We have our 3,700 stores that are going to be our delivery hub. We have customers wanting to do click and collect. They have the option of receiving at home, but most of them want to just do click and collect. If competition is digital only, they don't have that option. We are now getting to 700 municipalities with pharmacies. And in those, we are able to deliver in 1, 2 hours max. So we are highly advanced. We have our inventory. Our brand is there. Our high-income clients is very well assisted. We have 15,000 pharmacists. We created a platform and a digital experience that is very strong. We can clearly see that in numbers by the digitalization of clients because of the NPS of 81 that we've come to and more than that, Flavio, it's more about what clients do than what they say. And we're seeing that clients are increasing the recurrence of purchases in digital channels.

In the past, under 60% of our clients were from recurring customers, but now that number is increasing more and more. So clients are coming in, they're buying. They like the experience and then they come back. And that has been creating this fortress, which we believe is very important. Sometimes we have lots of debates like it's an MBA, we're looking at company A, company B, and we forget about the client. And it is the client that will decide who will be successful. And for somebody to leave a company where they feel well assisted and go to another, someone has to be offering something that is much better than what we offer.

Now days, we have proximity. We deliver very quickly in main capitals, we deliver in 30 minutes. If you see more downtown neighborhoods that can be down to 15 minutes, we have competitive prices because we have good purchasing power. We deliver that with a well-known brand with good reputation. It's Drogasil. We are not unknown. So we have a very high value proposition. Is it unbeatable? Well, no, nothing is unbeatable, right? But for someone to be able to persuade a client to leave us and go somewhere else, they're going to be having to offer a much better value proposition, which is not an easy thing to do.

Another important thing that I'd like to mention is that in a sector where there is consolidation where you have two, three consolidated players, any external events or economic crisis or a new player is going to impact the segment, but of course, the consolidated players as well. But for a segment that is not consolidated, we're talking about a segment that can be affected by any type of situation. So we are seeing interest rates that are high -- persistently high that is hurting the small business, and that helps us. If tomorrow, there is different legislation in labor laws and staff becomes more expensive, companies that have higher payroll expenses have lower financial capacity, they're going to be hurt more. If we have companies that don't have good digital journeys, they're going to have a harder time as well. So because we're well consolidated, macro events can help us more than hurt us. So I think that is something important to keep in mind.

And now just a final thing before we go into our Q&A. Starting on Wednesday, 10 in the morning, I would like to invite you to Raia Conceito, which is a flagship store that we're opening. It's a symbolic moment. There are some moments in a company life and they're unforgettable, and I believe this will be one of them. We have been thinking about this since last year. Marcello had hinted at this, at future trends. And last year, we started to listen to our clients based on the challenges we faced with HPC, and we were understanding how much our clients wanted to have a multi-brand store where they could have an in-person experience with consultants, and they felt that they didn't have this option in terms of pharmacies in Sao Paulo.

We then visited Saudi Arabia and different international locations. We talked to vendors who became our partners for this. And in a year where we were elaborating this new baby of ours, we are now coming up with this store that is adding more depth to beauty, more premium beauty cosmetics. We're bringing a lot of new brands, 50 new brands, and it will be in the neighborhood of Itaim Bibi, very close to Lima, our financial district. It's easy to be visited. Starting on Thursday, 10 a.m., we will be open. We know that this is a necessity. It is a demand that we've been hearing about, and we are excited to create this sensory experience. Pictures are beautiful, but the store is actually even more beautiful. And the cherry on top is our people, our staff who have been trained for this. They're not part of the picture. But if you go and you visit the store, you will be surprised that it's even more beautiful. You're all invited to join us and thank you very much.

We will now open the floor for Q&A, and we can then go deeper into different subjects.

Thank you, Renato and Flavio. Now let's open the floor for Q&A. The first question comes from Luiz Guanais with BTG Pactual.

I have two questions. First, in the same vein of what you said, Raduan, about the elasticity, I would like to know also the margins about GLP-1 drugs and your negotiations with the industry. Still about margins, if you could give us more color about the HPC margins because HPC was a big highlight in the quarter. We saw a sharp growth in the quarter. And we know that you have been working very hard on pricing and repositioning due to the pressure from e-commerce. So if you can update us on the negotiations with the industry, that would be helpful.

Thank you very much. Now let me answer the first question about GLP-1 margin. It has been very stable over the past 9 to 12 months at about 17%, 17.5%, 18%. Yes, things evolved. In the beginning, we had smaller margins and then we started receiving tirzepatide products and then the margins improved. And since the margins have been stable. Now looking forward, according to my opinion, I think tirzepatide should continue to be the same as it is right now because there's not a lot of competition.

Now with semaglutide, I think that similar drugs will come, and there is a trend for lower margins. Of course, we have to insist on origination. So there's an investment to be made there. But I believe that there is a trend for an incremental improvement in margins, especially for semaglutide. But for now, it has been stable. And the same thing happens with HPC. Again, we are very happy about all the lessons that we have learned and the muscles that we have been exercising trying to strike a balance between margins and sorting. And the margin has been very similar to what it was a few quarters ago. And the performance that caused us trouble a few months ago now is bearing fruit.

This new pharmacy that we just opened came from that need that was created in the past, thinking about things that we -- different things that we could do. And also, we started to understand how to acquire more competence and try to work on the margins and also promotions. We know that Black Friday was not so good last year, but HPC margins have been stable to directly address your question.

The next question comes from Joseph Giordano with JPMorgan.

My question, I actually have two. The first one is about cash conversion. It has been very strong. I would like to understand a little bit better what the supplier dynamic has been like. I understand that ICMS-ST tax is affecting another category now. So it will cause structural changes moving forward. And we are going to see some distribution centers maturing from now on. So maybe you will have suboptimal inventory in some parts of your operation. I'd like to know more about that. Your market share gain has been significant for many quarters now. I would expect 100 bps, but now it's closer to 100 bps. So I'd like to know your perspective about the competition in a high interest scenario. Raduan talked about closing smaller units. So how should we be thinking about that, especially on the side of suppliers? You became a safe harbor for suppliers, but some wholesalers might be struggling. I'd like to know more about that.

Yes. It's surprising for us even to see 170 bps increase year-on-year. but most of the share gain does not come from GLP-1. It does help, but it doesn't even account for 50%. But of course, as the GLP-1 base grows, it's getting closer to 12%, we expect the gain in market share to become smaller, less than 170 bps. But we are gaining share in sell-in and sell-out. We can see the networks, the chains advancing and gaining market share from the independent stores. And that happens due to high interest, of course, but also because the smaller chains are not taking so much advantage of the GLP-1 drugs. Only the larger chains are enjoying that benefit.

But when we look at the sell-out side, when we look at the big chains, we can see that we are also gaining market share. And I don't think that's due to any financial difficulty of the other players, but also because we are offering higher performance and experience, a better experience, including in the digital channels. We are evolving more than they are, and that causes that gap. We are not facing hiccups and struggles, which is natural. Five years ago, we had a number of issues on the app, for example, excess of traffic during the Black Friday period. It's natural. That happens, but you need time and also a lot of money to invest to overcome those challenges. That part of our history is behind us. Now we have a very solid app. So the big chains have been losing market share to us because of the experience that we provide.

Now about the cash cycle, the result has been very solid, as we said, with 11 days. We expect that result to be recurring looking forward. And the big issue here is ICMS-ST tax. The tax substitution is not going to happen anymore. We are going to start paying tax from the moment we sell the product and not when we buy the product. So that ICMS inventory, if you will, that was retained with the government will come back to the result. And that accounts for six days in our cash cycle. So it's going to be a benefit for us. And also the ICMS-ST tax is going to bring some benefits in our inventory. The inventory will go down by three days. It is going to cause an effect in our inventory, and it is going to affect the COGS and the inventory, and it will affect COGS faster than the inventory. So the inventory line is a bit polluted because of that.

That one day gain that we see in our line -- in the inventory line, it is actually more than that, but it is minimized because of the tax substitution effect. But that situation is here to stay. It is not a one-off effect on our result. The tax substitution will be removed from our base. So looking forward, that result will be perennial. That same level will be kept from now on, and that's a major strength for us. So the conversion should be easier for us looking forward.

The next question comes from Bob Ford with Bank of America.

Congratulations on the results. What are the updates about tirzepatide and GLP-1 drugs and compound pharmacies? And what are you doing independently and also in partnership with the sector to raise awareness among users? And I would also like to know about your perspective of the factors that will sustain your market share gain in terms of GLP-1. Is it going to be assortment? Is it going to be margin, price? And do you think that you are going to gain even more market share? Or do you think that the competitors are becoming stronger?

Thank you very much, Bob. I didn't quite get the last part of your question, but Flavio can help me. Our estimates about this are exactly the same as the ones that you hear and read about. Tirzepatide market right now in terms of units in the informal market is even higher than the formal market. But in terms of revenue, it is at least the same. And there's also the compound part of the market that may be the same size as the other 2.

We believe that the informal market is even bigger than the compound. But we think it is distributed like that. And that is a very worrisome issue for us in terms of public safety because people don't know where the product comes from. If they even knew that the product is guaranteed and it is high quality, that wouldn't be so troublesome. But it is also a health care risk for the users. We have been conducting campaigns on our Instagram page trying to raise awareness about the risks of using medications that have not been approved by ANVISA and that are not sold through the accredited channels. So we have been joining forces and also working isolatedly on our digital channels.

We have always talked to Abrafarma about the campaigns, and all members of Abrafarma are very much engaged in fighting the informal market. So we have been doing whatever we can. We're trying to understand what makes people resort to that, and it's clearly about the price difference. People need to have access to those medications, and tirzepatide is not affordable for a big part of the population. And there's also an issue related to getting the prescriptions. So that's what we have been doing about this, but we have still a long way to go in terms of winning this battle.

Now, if we can do that, if we can make those medications more accessible and affordable, and if we can raise awareness about the risks and make that migration, there's a lot to be gained. And as I told you, GLP-1 is very important for us in terms of market share, but it's less than 50%. We have been expanding. That's always on our minds, and we have been very successful in that effort. So the market share gain comes from the expansion that surpasses the expansion of our competitors, not only in the pace of the expansion, but also the quality of the points of sale. And also the digital channels have been growing, and it's also about the solidity of our operations.

We finished last month with the lowest inventory stockout that we had for many months. We were able to reduce that, but also we've done many other things, including working on our NPS, adding more staff in our pharmacies. So it's very hard to put our finger exactly on what factor made the biggest difference. All of those factors are important, and many of those factors are structural ones.

And also, Raduan, one thing that I would highlight is that there is no informal market for any other molecule in Brazil right now. The only case in Brazil is GLP-1. It is abnormal, completely abnormal. And we believe that happens because there's a desire on the part of the population for this product, and there's also scarcity on the side of supply and the average price is still very high.

Looking forward in this category, we should move to what happens in other categories, not having an informal market or anything like that. And things should go back to normal. Once we address the scarcity, we are going to see more volume of these products coming to Brazil due to the high interest in them, and the price is going to go down as well. And tirzepatide and semaglutide are very important molecules, but also in this quarter, ANVISA approved other 5 products in the semaglutide segment, and we expect to see another 7 products being approved by ANVISA until the end of the year. So the supply is going to increase and the average price will reversely go down. That gap of 22 points in the average price happens because of the new semaglutide molecules.

And Bob, also, what I can tell you is that with the new competitors, they should balance this category. And we can see the increase in our market share quarter-on-quarter. And we grew with a decrease in our prices of about 20 points. That average price was surprising to the entire market. We received many calls about the price of this new product. And we believed that the price would go down at some point, but it happened much earlier than we expected. So indeed, it impacted many players in the whole chain. And on our side, well, we are retailers. We buy and sell. If the product can be bought at a good price, we are going to sell it at a better price as well. So it's good for us. And right now, we believe that we are by far the best player in the GLP-1 segment. Our market share is extremely significant in this category. The market is growing, and we are growing as well, so much so that this business is growing as a share of our operation.

And one positive aspect that I would highlight is that the market has been very anxious about that. It is the big wave of change in health care in the pharmaceutical sector. And everybody is looking at things from a short-term standpoint. But actually, the margin right now for the products is not that relevant if you think of the big picture and the potential. That's very clear.

Now about the consolidation, considering the pressures in the segment, do you think that, that can cause an acceleration in the consolidation movements? Well, if you look at recent data, you can see that, that is already happening. And I believe it will continue. I don't see anything changing. The interest will continue to be high. Some categories are exclusive to the big chains. There are some things that can be more difficult for the independent units. So I believe that the consolidation movement will accelerate.

[Operator Instructions] The next question comes from Mauricio Cepeda with Morgan Stanley.

I have 2 questions. The first one is very financial, about capital allocation. You have an adjusted leverage at 0.8x, and you have an expectation to generate cash that is positive in the future. What is the leverage bracket that you want to be at? And considering that you are below what you have been historically, how do you plan to allocate this capital? Would you accelerate organic expansion, or with repurchase or dividends, et cetera, buyback? What would you suggest?

And the second thing is about those benefits of GLP-1, et cetera. Are you ready to capture opportunities that go beyond the medication? Are there any strategies for complementary products, medical devices, supplements, scales, perhaps service for health care monitoring? I don't know if this is something that could be expected from the GLP-1 success.

Thank you so much. That is both great questions. So to start, yes, we are deleveraging. So we are creating investment capacity for things that we believe will give us a return now that interest rates are very high. We are not going to accelerate organic expansion too much, not because we lack the resources, but because we want to make sure that quality comes first. We want to expand at that rhythm of about 10%, as we have been saying, which is proving to bring the appropriate return.

We have the resources there. If we think we should push further, we can. Now when you think about buyback and shares, et cetera, those are things that we are analyzing all the time, and we may, at any time, choose to do those things. It's important that we know that we are deleveraging at a time when costs are very high, knowing that we can contribute to the end results. Number two, we know that, that gives us space so that if we understand that there are projects where capital allocation makes sense because it will give us a better return, then we will do that. There is no one theme that I could talk about today to specify.

The second question is good. We talk about GLP-1, but GLP-1 is one part of a whole care journey that goes through other products, other services, et cetera. And we've been focused on that quite a lot. We are developing internal solutions. Sometimes we are developing things with the industry that is more specialized than we are in terms of the weight loss journey. And we think about how we serve our patients during their journey continuously speaking, so they understand what additional products would make sense to complement their weight loss journey. We can monitor side effects, how to treat those side effects, how to have professionals close to them.

And we are trying to engage our clients during this journey, not just in terms of assistance, but financial aid as well if perhaps there's a loyalty there and they get discounts that are progressive. And it's true; we often just talk about the product, the share, et cetera, but the point you bring up is very important. It is our role as health care providers that we build a more -- a healthier society, thinking about this journey.

The pharmacy that we are going to inaugurate tomorrow, you will see a full section of supplements. It's very robust. You will see other devices that are there to help patients monitor their own health, and those are all there.

[Operator Instructions] Our next question comes from Tales Granello of Safra.

Another question about GLP-1. Would you have to share with us the percentage of migration that you saw from your client base going from Ozempic to the generic brand, the ones that we've been offering? And of new clients, how many clients of Ozivy are new clients to you, individual clients?

Well, these are preliminary data, and we have to be careful. Every time a new product is launched, we have to be careful. So it does need a prescription and we keep that prescription. So if someone is using an older product, they have to go through however much they have at home before they change and migrate to this new offer. I think preliminary data sometimes are not representative of what they will be once this initial cycle is over.

I say that a little bit above 60% of Ozivy were new. We are seeing very little migration from tirzepatide to semaglutide, even though semaglutide is becoming cheaper. Within semaglutide, we have this new medication, Ozivy by EMS, and 60% of the clients were completely new to the category and the others were migrating. We don't know where that is going to plateau, but this is the number we have right now. I can't tell you if these 65% were clients previously, but were not part of a weight loss journey, or if they are completely new to the network as a whole. Unfortunately, I wouldn't be able to tell you that.

But I believe those are recurring clients who were now starting a weight loss journey, having found out that there are cheaper products and are now talking to their doctors, et cetera, and started a treatment. I think that, that's what we're looking at. But again, we need to wait for doctor appointments. We need to wait for prescriptions, people who are midway through treatment with a different product, I think we still need some time to understand how this is going to play out.

Just very quickly here about the financial market and the health journey. When he talks about the prescription, any GLP-1 product requires prescription. However, we don't have that exchangeability, right? That prescription needs to have the name of the product, and that only happens after the industries talk to doctors and create loyalty, et cetera. And it takes a while for this cycle to be stabilized. Volume will grow with demand, with prescriptions, et cetera, but then it will plateau at some point.

[Operator Instructions] Now we are going to hear from Vinicius Strano with UBS.

I have 2 questions for you. About combo promotions with Mounjaro, how do you see the impact of that in terms of demand? You showed a graph that had some of that relativity of tirzepatide, but I think that was throughout the quarter. So I wanted to understand that at the end of this quarter. Also, thinking about the gross profit with tirzepatide, we still were looking at something that was very, very high. I think volume will offset that. But I want to understand your view on that with this specific medication.

Now, thinking about gross margin still, how do you evaluate the level of losses now compared to your historic numbers, if there are opportunities to capture improvements in terms of losses, perhaps a reduction of theft now that the product has become a little bit cheaper, et cetera, and shoplifting was also an issue.

So let me start with the last question. Things that have improved from last year was that we had a reduction in losses that was due to several initiatives, not only shoplifting prevention, but a whole management of inventory that reduced losses, and that showed a significant drop. It is still above historic averages. Yes, there is a possibility that we can bring this down, and we want to. We will do that because of our structural strategy that's internal, but also because it's more accessible now in terms of price and the parallel market becomes less attractive. I think all of those factors combined will contribute to us having fewer losses, and we'll get closer to normal levels.

With semaglutide and tirzepatide, which was specific, month-on-month, every time the average price drops regardless of what the dosage is, the volume will always offset that, and our revenue is better. We saw that within the quarter and every month as well. If the price goes down, it is always, always offset by the demand. And it doesn't matter if it's a more expensive product or the cheaper products. We still see this elasticity.

We're not looking at the contribution margin of the specific product. We have GLP-1 that represents 12%. We really believe, based on the trend that we showed, that this is going to increase share. It's not going to give us the leaps that it gave us in the past, but we're seeing signs that this is slightly increasing and that the aggregate gross margin of GLP-1 should increase with competition. With unit economics, yes, unit profit of a semaglutide box should go down. The unit profit of tirzepatide with time should go down as well to generate accessibility, generate migration. But in aggregate numbers, because of volume, that will be offset. So we are very attached to the aggregate view of this. We're not going to be too worried about that unit price.

I think an important point here in terms of combos that was also talked about, there is still a lot that is related to the experience of the product. The formal market of GLP-1 products is 1 million boxes per month. We're talking about 70 million, 80 million people. There's a lot to explore, and we're at the beginning of this journey. So it's about the discovery, the experimentation, and then we look at the engagement on a whole journey of weight loss.

This combo is a very solid access channel to start this journey. When someone is using it for more than a month for recurring periods, that, of course, will make losing weight easier and it will facilitate the journey of the doctor who is following up on this patient. It is a cycle that self-feeds in a very positive way. We are seeing these combos promotions that are coming in because of the recurring purchases. Our clients are now buying more often as well.

[Operator Instructions] We will now hear from Irma Sgarz from Goldman Sachs.

I think many of my questions have been answered already by things that you've mentioned and by questions from my fellow analysts. But here's my question. I know that NPS for your online channels have been improving in the last 2 years. We have improved significantly. But there is still a gap. I think part of that will always be structural, but there is a gap between brick-and-mortar stores, which has an amazing NPS, and the digital channel. So what do you think we're missing digitally speaking, thinking about the journey for our next years where we have room to improve?

It's a great question, and it is actually really hard to answer. If there were a silver bullet, we would have used it by now. But I think there is this gap between online and offline. And I think it's because any friction that happens in person, there will be a human to help you to give you assistance. There could be a problem or not, but a human is there to guide you through this, whereas online, you don't really have that. Maybe you're just trying to get a refill or something; you're not going to have that person right there, who's there talking to you, answering questions, showing that they care, that they are worried about your health and not so much about that specific transaction. So we noticed that this additional human factor, the warmth, the eye-to-eye conversation, is something that makes a difference. And it is for sure, something that explains part of this gap.

That doesn't mean that we are not going to go for 90 NPS online. We want to do that. We want to try to warm up the experience as much as possible so that we can bring some of that human warmth there. Maybe we could have an assistance, and we could make several improvements of that journey to improve the digital channel experience. We are fortunate that more than 20% of clients that purchase there do answer our survey. And those that see any pain points, they tell us about it. And based on what they tell us, we know what we need to improve on, what is the backlog of new features, what are the topics that we have to improve on, and we compare ourselves to other players.

Of course, it is baby steps, but we are focused on improving that. We were at 50. Now we're at 81. So we improved a lot. But from 50 to 81 is easier than from 81 to 85. Still, we are still working. Everything that is structural is ready. The heavy part in terms of the digital channel for modern architecture, infrastructure is there. I know we did it all and you asked us, why are you investing so much in digital? Why is the G&A so much higher? And here's why, right? That's why we have an app now that represents 85% (sic) [ 83% ] of our online sales. There's no silver bullet, but there is still the same drive to slowly improve the NPS that we've achieved.

[Operator Instructions] Next question comes from Leandro Bastos with Citi.

I'd like to know more about the margin vectors for the company. For many quarters, your real growth has been very consistent, and you also enjoyed a lot of growth in your revenue. And now we are going to see a more difficult scenario for GLP-1 medications in the second half of the year. And I would like to know what we can expect from margins looking forward. Of course, I'm not asking for any guidance, but if you can give us more color, that would be great.

Well, we believe that there is a possibility for us to get marginal improvements in our gross margin with a number of factors. We have a project with Simon-Kucher in terms of pricing so that we can generate a price perception that is positive on the customers and we believe that we can generate value by doing so. There are other projects in terms of restructuring the commercial department and also the leadership positions in the company. And we believe that, that is going to take us to a whole new level of capturing gross margin. Our relationship with the suppliers is great, not excessively great. It is at the sweet spot right now, but we do see space for incremental growth in our gross margin.

And also -- we also see possibilities of improving our expenses. We want to adopt AI more and more in the company's processes. We believe there is a lot of value to be captured there. We can dilute G&A expenses from doing that. We don't need to increase our structure in the company to keep up with the growth of the results because we can have AI to help us there. And we can increase the volume of sales as well because we want to continue improving our value proposition.

We want to be the best company in the pharmaceutical segment for the customers and for our staff, our people. And we can also use AI to gain productivity in the internal processes to make our lives easier. So there are investments to be made on that front as well. Our ambition is to continue advancing year after year in the profitability of the company.

I always say that the best days are still to come. Our result is great, very solid, but the best days are still to come. Raduan talked about our 20% market share growth, but when we look at each state in Brazil, we can see that we are leaders in 1/3 of the states -- 9 or 10 states. In the other states, we are #2, #3 or even #4. So there's a lot of room to grow there and a lot of gross value to capture. And we can also capture value from the customers. We have been investing in the customer journey and recurrence. If we look at our customer base, many of them go back and forth between Raia and Drogasil, the 2 brands in our company. So the fact that we are there for the customers either way is great. And also with new molecules, new launches, all of those things are going to add to our top line.

When we think about profitability, considering the top line scenario, I usually say that our focus tends to fall on improving profitability by diluting SG&A expenses and not so much from increasing our gross margin. Of course, we can do that by decreasing expenses to a better level. But I would say that the biggest levers are much more related to optimizing SG&A expenses. And of course, our mature stores are growing by 8 points above the inflation. We should remember that a lot of our expenses happen because we are expanding. We are opening 350 stores per year, 10% of our footprint. If we were to stop that expansion, then our EBITDA would grow by 50 or 100 bps, which is still a lot.

So the fact that we are growing ends up consuming the profitability that we could be delivering to the market. Of course, at some point, that expansion will reduce or plateau. We are going to have 4,000 stores at some point, but that 10% growth year-over-year will not -- will stop accelerating. And we are not going to consume so much cash. And on the other hand, we are going to have a smaller percentage of nonmature stores.

So the levers for growth are here. The biggest vector that we can tap into is the availability of levers and our commitment of them in comparison with the other players in this segment that are more variable. In our case, the population is aging. We are talking about an aging process that is going to last for 30 years. We are going to have 1 million people reaching 60 years of age every single year, and that is great for us. So that's why I say that the best days are still to come.

[Operator Instructions] Now the next question comes from Lucas Esteves with Santander.

Congratulations on the consistency of your deliveries. I'd like to ask another question about tirzepatide. I do understand the potential of that, but I would like to know if you believe that the average price of tirzepatide is going to go further down? And do you think there's going to be an excess volume because that combo is going to anticipate the treatment because you have to buy the treatment for a whole month in advance, right? So I'd like to know the impact of that.

And I have a question about your flagship store. I know that you are still testing the waters, but do you think that, that can impact your HPC mix going forward? And how much of that can impact your 10% expansion for the next years?

Well, our competitors gave you a lot of details about the combo to justify poor performance, and now you're asking specific questions about that. The average price is going down, but not significantly. It is not related to the decrease in prices of semaglutide. On average, it's dropping by 4% or 5%. And the average price is being more than offset by the volume. We don't see a hangover, if you will, because the customers bought more of that. They are not going to buy anything for 2 months, but they will come back eventually after they run out of the combo products.

And we have not felt any impact on the demand because of that. But I don't want to give you details about each dosage or anything like that, but I do believe that you are interested in that. But we have not felt any of that hangover effect. And there are dosages in which the average price is higher and not dropping so much. And since there is a 1% penetration, we would have to give you so many details about something that is not that relevant.

We are very optimistic about the new format, the new flagship store, to address your second question. In a company that has almost 4,000 units and BRL 1 billion in EBITDA, we cannot afford to launch a new initiative at the whim of the management. Of course, if we're doing it, it is going to bring benefits. And we expect results that surpass the sales that it is going to deliver. We want to learn from this experience. We want to use it to understand what can be done, for example, in the units that are located in shopping malls, we want it to generate value, and we want it to help us strengthen the digital sales.

As we roll out the flagship stores that have an exclusive assortment, we are also going to make those products available online. So the inventory is going to cover a larger area than that of the flagship store. And we are going to learn a lot from how to manage some categories. And then maybe we can review the assortment present in the other 4,000 pharmacies. We are going to learn from the customers' behavior; they are going to show us where the value is to improve HPC in the other 3,800 stores that are not going to be flagship stores. So we do expect this store to generate a lot of value that goes way beyond how much more this specific store is going to sell. We are very optimistic about this initiative. And by the way, congratulations to the entire team that was in charge of conceiving the flagship store.

[Operator Instructions] The next question comes from Guilherme Domingues with HSBC.

Actually, Flavio addressed part of my question. But it seems to me that RD is starting a phase that is all about capturing market share and expanding, but your growth is now contingent upon the digitization of the sales of some categories that are not so digital still. Can you give us more color about the top line growth and the focus for growth going forward?

Well, I think I'm going to complement what Flavio said. Your question is much more about improving the efficiency of the existing units, which is not easy. The mature stores are selling so much. There's a performance gap that is huge. So to grow on top of a base that starts at 1.2 million, for example, and in some locations, it's even more than that, 1.3 million, 1.4 million. When we look at the customers' behavior, we still can see a low-to-medium loyalty. Even the customers that go more often to the pharmacies, part of them are very loyal, and they do concentrate their purchases with us. But there is a good portion of those customers that spend a lot in pharmacies that, at some point, buy elsewhere. And it is very clear to us what are the customer segments that are at the highest value bracket. And we have a very structural perspective about how to deal with this.

You asked about expansion in categories, right? We are building a customer-centric company, and we are trying to understand the value proposition for each segment, and we want to have a price strategy and a loyalty program that are specific to each segment so that we can become the first choice for each of those and increase the LTV. We don't want to be too specific here, but our management approach focuses not only on expanding, but on how to use our tools to understand the segments better. And there's a lot of room to grow in terms of becoming the first choice. We believe that we can work on making those customers come back to us more often, and that can bring us a lot of results, especially in the main -- the priority segments.

[Operator Instructions] The next question comes from Henrique Spavieri with Bradesco BBI.

I have 2. I just wanted to have more visibility on the profitability levels of the stores in the medium to long term. You talked about the improvement in your IRR. And in the release, you said that 55% (sic) [ 25% ] of the chain is still maturing. I would like to understand the main drivers of this evolution. Is it logistics? Or is it GLP-1 medications that are contributing? And I would like to know if there is space for other levers to become as important in the next years.

I think that you answered the question already. Of course, as we sell more GLP-1 medications, it will help us a lot, but also we want to be competitive in terms of prices. We don't want to have so much stockout, and all of that is going to help the new pharmacies to yield better results faster. But of course, we need to be very accurate in our choice of locations, and we are very good at that. I try to be as humble as possible, but it's hard to be humble when it comes to that.

I don't know if there's any other company in the world that has such an airtight process for choosing locations as ours. We have a very low error rate. We are very accurate in our location choices, and that was not created overnight. It is the result of hard work year after year, and also using technology. It's hard to build that overnight. And when we choose the best location, and we bring the best logistics, the best team, the best execution and commercial strategy and everything that we do that helps us sell more. So we put all of those things together to be successful as we are.

Our IRR is never below 20%. It is historically above 20% and is now closer to 25%. And that is very important as well. That should be maintained. And it doesn't mean that we are just addressing the high-income segments or anything like that. No, we are able to maintain that level in smaller towns and also locations that are not so close to the city center. So we are able to maintain the IRR in locations that are very new to us. But the fact that we are so accurate in choosing the best locations is a major factor that helps us keep such a high IRR.

[Operator Instructions] That concludes the Q&A session for today. Now I'd like to turn it over to Raduan and Flavio for their closing remarks.

I'll be very brief. I'm just the spokesperson here. The results are the results of the hard work of almost 80,000 people and everybody that came before us. We stand on their shoulders. And now with the hard work of the 80,000 people that work with us, they look back and recognize everything that was done before them, and they are humble enough to understand that we still have to learn and work hard, and that's exactly what they are doing. So thank you very much to each and every one of you working with us at the pharmacies, the distribution centers, the corporate departments. We have been delivering such incredible results together. It is the third quarter in a row that we delivered solid results. We're very happy about what we have done so far, but the best days are yet to come, as Flavio says.

With our strengths, with our team, I'm sure that we are going to be even more successful in the future. Thank you, investors, shareholders, all of you who knew that the results would be good, and that is a sign of trust. If you anticipated that the results would be good, that's great because you recognize how strong and consistent we are, and we believe in our ability to deliver according to your expectations. And we hope that we will be able to continue delivering great results in the coming quarters.

GLP-1 is going to generate value for the segment as a whole and even more to us. The digital channel is a reason for us to be optimistic about our ability to gain market share. Being omnichannel is going to be incredibly important for us. And I'm very optimistic, confident, but also humble. I know that we need to continue to work hard to deliver even better results than we have so far.

Thank you very much once again, and please go visit our new pharmacy next Thursday. Thank you. Bye-bye. See you next time.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[Audio Gap]

earnings call. The slide deck can be found at the company's Investor Relations website at ir.rdsaude.com.br. This conference's replay will also be made available later at the website. [Operator Instructions]

Before we begin, we would like to inform you that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the company's management's beliefs and assumptions as well as on information currently available to the company. Forward-looking statements do not guarantee performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur.

Investors should understand that overall economic conditions, the industry's conditions and other operating factors may affect the company's future results and lead to results that differ materially from those expressed in such forward-looking statements.

Today with us are Mr. Renato Raduan, CEO; and Flavio Correia, Head of Investor Relations and Corporate Affairs. I'd like to turn the conference over now to Mr. Raduan. Please, Mr. Raduan, you may proceed.

Good morning, everybody, and welcome to our company's first quarter 2026 earnings call. Again, it is a huge pleasure to join you once again to give you more details about our results. I'm sure we are going to have a very rich 1 hour, 1.5 hours together this morning. Flavio, good morning.

Good morning, Renato, and good morning, everybody.

Thank you very much for the partnership and the patience for waiting for the results that were published last night. And now we are ready to give you more details on the results and answer your questions.

Okay. As usual, let's talk about the highlights first. Very briefly, I'd like to touch on 4Bio. Last Monday, we signed the closing and finished the deal. We are very proud of 4Bio and its success, but now it is in the past, and it is no longer part of the continued operations. And this is how we are going to address the results from now on.

In the quarter, we finished the period with 3,614 units in operation, opening 68 and closing 1. We continue to pursue the plan of 330 to 250 openings according to our guidance, but our expansion is still above 20% IRR, which is the minimum that we expect. we reached 53 million customers. And those 53 million, 52 million customers in this quarter, we served them with 111 million tickets. And what we take the most pride on is the fact that we were able to sustain an NPS of 91% despite such high number of tickets. It is not easy to keep such a high NPS with over 3,000 units all around Brazil with so many tickets. That's why we are so proud of it, and that's why we have been so successful in our results.

Excluding 4Bio, our gross revenue came to BRL 12 billion, 20% more year-on-year, a significant growth. It means that we grew by BRL 2 billion in revenue quarter-on-quarter. And that was accompanied by a growth in mature stores of about 12%, considering our expansion, you can see how solid this growth and how solid this result was. And also, we had a very significant market share increase with 150 bps. We had already had that increase in the previous quarter, but you should remember that we had a very solid, very good Black Friday compared against the Black Friday that was not so good. And still without the Black Friday effect, we were able to gain 150 bps across all regions. And on the digital channels, we reached BRL 3.6 billion in revenue, 66% growth, and we exceeded 30% share in retail.

And that led us to an adjusted EBITDA of BRL 821 million, virtually 32% growth in our EBITDA. Our EBITDA grew by BRL 200 million. Our net income came to BRL 300 million, actually, BRL 299.8 million, 70% increase. It's BRL 120 million added to our net income and a free cash flow of BRL 285 million and BRL 136 million total cash generation. In our perspective, this is a very solid, consistent result that consolidates recovery that we showed all throughout last year, but it is important also to have a second quarter with the same level of results to be able to show you that we are indeed consolidating this type of performance in our company.

We went from BRL 10 billion in gross revenue to BRL 12 billion. We grew by BRL 2 billion then in 12 months. Most of that growth came from the brand name drugs, the GLP-1 drugs are included here, Wegovy, Ozempic, Mounjaro. And if we exclude this, if we exclude those drugs, the brand name drugs are still growing very strongly. And we can see here that HPC grew by 11.7%. And I have a highlight here. It rained more than usual in the South and Southeast of Brazil. If we were to isolate the growth of repellents and sunscreen, the growth in HPC would have been 14.2%, in line with a growth -- a healthy growth and above inflation. So if we exclude repellents and sunscreen from this number, the rest of HPC grew by 14%, 14.5%, which is very consistent as well.

As I told you, we grew by 20.4% in total with 12.8% growth in mature stores. And there's something that I should mention here. It is a 12.8% growth, yes. But on top of sales base that was already above BRL 1 million. In the previous year, we grew less than expected. But it doesn't mean that the base was low. The sales were already very good, above BRL 1 million in mature stores, and we were still able to grow by almost 13% on top of that. Our mature stores are selling at around BRL 1.2 million, again, very strong results.

Before I turn it over to Flavio, I'd like to draw another comparison. Of course, comparing our results against our own results, we are very happy to see what we have done. But when we compare ourselves to the rest of the market, we are very happy to see that we gained 150 bps in market share, reaching almost 20% of nationwide market share.

In Sao Paulo, the lift was very significant, 31.6% to 33.8%, 220 bps of market share increase in Sao Paulo. And that is the result of a very good mature store performance, but also expansion that we accelerated here in Sao Paulo. You can see here the share of the states in our year-by-year expansion. The darker color indicates the expansion in Sao Paulo.

And we can see here that we sped up the expansion in Sao Paulo over the past 2 years. In the Southeast, 160% -- 160 bps growth rather. In the South, it was a smaller growth. In the Midwest, we went from 22.8% to 24.5%. And here, you can see that green accounts for our growth in the South of Brazil. It used to be 20%. It is now 13%, then 10%. So the market share increase there was smaller. And in the South, we have the most saturated pharmacy region. It is the most saturated region in Brazil.

And we had a very solid market share gain in the Northeast, 130 bps and then 130 bps in the North of Brazil as well, although we slowed down our expansion in the North and the Northeast. And still, we gained market share because of the growth of the existing stores that grew above the average. The nationwide average was 12.8%, but in the Northeast it was even more than that because of the expansion that we had there. And that's why we had such impressive market share gain there. So we can see that the top line sales were very strong, and that is the voice of the customer telling us that they are choosing us more and more.

That is great, Renato. Again, this just shows that the customers are happy and choosing us. And that's also the result of the digital channels that are stronger now. They are really the powerhouse of our business. It is an activity that accounts for about 30% of our sales. It is an activity that in 1Q alone received 170 million accesses, which is very significant. We have a recurring base of customers coming back to the apps and website to find good opportunities and engage with us.

The digital activity was already strong last year with 20% to 22% share in our business, but it still grew by 66% in the period, which is extremely positive. And the activity is consolidating itself through the app more than any other channel, which accounts for 83% share in our digital channels.

We should remember that the app rewards customers for their recurrence and long-term loyalty. It's not just about the volume. It's also about the quality. The digital channel embraces many ways of engaging with the customers. And the app is by far the biggest store that we have in our business. But also, we serve our customers from mobile and desktops and laptops. And we also have the super apps accounting for 5% of our sales.

It is important to highlight that the marketplaces, our systems that bring together a number of customers and page views, and we are present across all of them. Of course, we are providing good services to the customers through those channels, but it is not the preferred channel that our customers go for when they come look for our products.

Now the mix of deliveries, we have the click and collect, which is a very important channel for us. 95%, or actually 97% of the deliveries right now are done in less than 1 hour, be it with click and collect or home delivery or when we deliver the products to the customers' workplace. And we are very proud about our app NPS, 81%.

There was a slight drop in the delivery service, which is related to the inventory of certain categories. Sometimes when they go there to get the products, the products are not there. We have that instability with GLP-1 drugs, but it is going to normalize as the inventory goes back to normal, and we are very proud about the fact that customers are showing us that they are happy with our digital journey through the NPS.

Now our gross profit, we have a stable margin of 28.3%, but a nominal growth of 20% year-on-year. And here, we are talking about over BRL 500 million in growth year-on-year, which is positive as well. We started from a margin that was under pressure due to the GLP-1 drugs. That caused a pressure of 40 bps. But that was offset due to the write-off of some losses and other commercial gains, including partnerships and relationships.

Now let's talk about our SG&A. This is a very solid part of our results. We can see here the sales expenses going from 19.1% to 19% in the period. These selling expenses will dilute themselves, although we had a strong capture of our EVP. We're talking about 50 bps here in positive impact with compensations to our team. And still, we were able to offset that with our expenses, bringing the selling expenses down by 10 bps.

And G&A. Our G&A has been stable. Nominally speaking, we had BRL 294 million last year, and we're standing at BRL 296 million this year, which is very difficult to maintain. But still, we had a very strong dilution in the period by 50 bps. When we performed a few adjustments last year in the first and second quarters, there was some doubt in the market about our ability to keep that level and if it wouldn't be necessary to hire more people. And this is the proof that, that was not necessary and our movements were correct and sustainable. And the number will be maintained at this level over the coming years.

And that takes us to our EBITDA. Every time we talk to the market, to the investors and analysts, I always say that the that this company is working to increase profitability as expected, of course. And that increase will come through the dilution of SG&A, then from an increase in the gross profit. And that works both ways. It causes us to be more efficient on the expense side and also keeping our competitiveness with stable gross profit. And as a result of that, we can see that our EBITDA reached BRL 820 million in the period, a BRL 200 million increase or 32% increase year-on-year, an increase of 60 bps in the period, as you saw in the previous slides.

Our cash cycle is another very strong part of our results. We had a drop of 10 days in our cash cycle in the period. And that drop was caused by a decrease in the inventory level. We had a drop of 8 to 9 days in our inventory cycle. And there was an effect here related to the taxes in the state of Sao Paulo related to some categories of drugs and HPC as well. But we are talking about here a drop in 3 days in our inventory cycle just because of that. And the other indicators are very positive as well.

And then when we look further into it, we see that the adjusted financial expenses are stable at 1.8% with the base interest rate being high at this point, so it's challenging, but we're doing well. And the income tax is at 0.4%. And the adjusted net income is BRL 280 million, and it has been growing year-on-year. Here, there is BRL 120 million increase at 2.5% of the result. This is quite positive.

We really wanted to highlight here in this breakdown, what 4Bio was, what the positive results of 4Bio were. We have BRL 13 million, BRL 15 million here from 4Bio and the 4Bio was the reason why we sent our release a bit later last night because we really wanted to show this breakdown, excluding and including 4Bio. And we really wanted to show that 4Bio is no longer an operation that we have.

It is a discontinued operation of ours. But the resources that were generated that are discontinued from a net income perspective, they now are going to be part of our result in the financial expenses with the payments of the sale of the company. So we have the results of the past and the results of the future as a discontinued operation of 4Bio. It's easy for you to compare both situations. That's it, yes.

When we look at our cash flow, there isn't anything special to say about it. Our cash flow improves our adjusted EBITDA in BRL 200 million. So this is sustained throughout. We also see the 4Bio effect in different line items with the resources, the proceeds from the operations. So I think this is quite well explained. There is stability, and we end this period with a total free cash flow of BRL 130 million and BRL 112 million with 4Bio. And this can also be seen as a stable net debt considering the size of our company and a financial leverage that is 1.2 our EBITDA.

And before we open up for the Q&A, back when I was an engineer at the engineer university, we needed to answer exercises where there was one result and you had to get to that result somehow else and prove that, that was the right answer. And this is what we see in RD Day, and we really show how the snapshot of the 1 or 2 quarters doesn't really represent the future potential of this university -- of this company.

We're really improving our competitiveness, our value proposition. We have a superior value proposition. Our sales and market share gains with superior performance and investment power. So BRL 200 million in EBITDA, BRL 120 million in net income, and that allows for more investment in the value proposition. And this flywheel had already been seen with very strong assets. The results from the previous quarters is really what we wanted to show with this plot.

These assets are going to get stronger and stronger. I think the only thing that won't change here is our founding date, right? But the NPS is 91. Right now, we'll soon look at it, and it's going to be higher. We are among the 20 most valuable brands, most recognized brands, and we'll soon be among the 10 most valuable brands. And we're going to continue to increase. We're going to continue to increase the number of customers. There are 84 million, they will be soon over 100 million, and we'll soon have 4,000 pharmacies. And we have 30% retail sales, and it'll soon be more than that as well.

It's great to see our beliefs translating into numbers. The work of the 75,000 people in operations, in the pharmacies, and customer relations in the corporate department, all of us creating these results together, leading to this satisfaction. We're going to have more time for the Q&A today. And then I will have my final remarks at the end, of course.

Thank you, Raduan, and thank you, Flavio, for your explanations. Let's now start the Q&A. And we have Joseph Giordano starting from JPMorgan.

There are 2 points I'd like to ask about. You already spoke about the top line, the slowdown that we had because of the calendar effect stemming from Black Friday, which we don't have in the first quarter, and Raduan has really detailed the HPC. Were it not for these effects, the performance might have been much better.

One thing about GLP-1, we understood that the supply was a bit tighter. There was some quarter-on-quarter stability. There might have been an expectation that it would have risen. Is there any change when we get to the end of the quarter, there is a change in the supply? Is this going to be carried over into the second quarter?

And when I think about HPC, we have less seasonal effects in the second quarter, I assume. Can we adjust it more excluding the seasonal events? So that's my first question.

The second question has to do with the gross margin. I understand that it should have been better or more neutral. And you think about trade allowance has been normalized in the industry, price wars and HPC. So how do you see opportunities to improve the margin in the category that is growing the most, which is GLP-1 and considering that there is a potential opportunity for new generics in the coming months?

I'll talk about GLP-1 and the margin. All of your assumptions are correct. GLP-1 hasn't had restricted availability or unrestricted. Mounjaro 2.5 and 5 was more restricted. That caused GLP-1 to be more stable from the first of the second quarter. It's higher than the -- it's 2 digits, but it's low double digits, and it's quite stable there. As of the second quarter, starting April, we understand there will be more availability in our inventories. And the generics start to gain more traction, and that will reduce the average price of the whole category.

So there are new -- the new generics they're going to be joining the category. There was a lot of apprehension in the past around the generics, if it was just going to bring down the price of the category and allow more people to access the medication, but no one really knew how this access was going to be. I think everyone now understands how big the parallel market is, be it compounding the drug or importing it. It's natural now that everyone understands how big the market is that there should be a migration from the parallel market to the pharmacies where you have a more reliable origin of the product.

I think in the long run, there is a chance that there will be a share that is over 12%. We see McKinsey and other studies showing that. And I think that the growth pace should be slowing down. GLP-1 increased in the course of 2025. I think it will continue to accelerate, but at a slower rate. Our gross margin is growing in this segment. When there is a monopoly, there's one single player, they have more pricing power.

If there's a second player joining, the first needs to be more competitive already. And when you have generic medication, then you have more of a price war, more competition, and that will increase the retail margin. So we see that our margins are already improving with new similar drugs. And well, remember that the general margin is 20%. And now we have the brand and similar drugs. So it's not going to be massive, but it's improving what's already good.

So even if we had a stable penetration, we would have already increased our profitability because profitability is rising. So we could have an increase in profitability and share and penetration with this -- with the new prices.

I would like to answer the HPC bit. Just to complement on your answer. We always talk about the formal GLP market around 1 million packages a month. And the informal market is 3 million to 4 million packages. So when Raduan speaks about the parallel market migrating, so the informal migrating into the formal one, we're talking about something that is three or fourfold larger than the official market.

Now HPC in the second quarter, there is much we can anticipate. There is no calendar effect in the second quarter. So let's wait and see what the results are going to be like. In the course of 2025, we showed we had less promotions than we wished we had. We had slightly less than 50% being sold through promotions through sales. Every shelf in every pharmacy, whenever you're going to buy a deodorant, there is a buy to get the third one free sign. And HPC continues to be stable. It's higher than 30% as it's always been. The margin has always been above 30% and with a 14% growth, excluding seasonality. So we don't see the need to invest even more in it at this level of growth.

Well, if your question has to do with higher level of competitiveness through other type of competition that we see in the market, then we do not see it. So the competitiveness or rather the competition we see now is the same that we saw in last year and that we're going to sustain while the market stays as it is. We are operating well. The numbers and the figures are quite positive. So this really leads to good results.

Now we have Luiz Guanais from BTG Pactual with his questions.

I have a question around working capital. That was a highlight, a positive highlight in the quarter, was higher than what the market expected. How have negotiations with suppliers been doing, especially focusing on the pharma side? You've given more details on HPC, and this was a balance you were seeking and pursuing last year. But when I look at the pharma front, how have these negotiations been going? When you think about rebates and you think about terms. So looking forward, what can we expect in 2026 for working capital, also considering that GLP is going to be growing, maybe not as quickly, but that it should continue to grow anyway.

Thank you, Guanais, for your question. We talked a lot about how we've been working with HPC suppliers to deal with the price wars in marketplaces. And we have partners here to help us be more competitive, but we haven't really spoken much about the pharma negotiations. But that continues to go well. Even though we're very competitive, we invested in prices and campaigns and sales, even absorbing GLP-1. With a strong campaign from last year, we continue to have a strong margin.

But now when you think about the cash cycle, I think the star of the show wasn't receivables or payables, it was the inventory reduction. Inventory reduction was really the start of the show here. That's really the driver that led to this cash cycle. As Flavio said, some of that has to do with the ST leaving, and that's the tax changes we had and GLP-1 with a strong turnaround.

So that's part of it, but there's a structural part of inventory reduction that comes from a structural analysis, which is the result of the work of supply chain, the commercial department and operations department working together. They are reducing the inventory and the inventory that we have. And reducing also inventory -- lack of materials in the inventory.

We really see that we have a reduction in our inventory. I think this is going to be sustained, and we should see some improvement. And I don't think the cash cycle should relapse and go back to growing. It's quite structured. It's well structured. It's quite solid. We got almost 10 days in cash cycle here and that's an improvement, and we should continue to move forward slowly but surely.

And the payment from customers, this -- the payment terms have extended in comparison to what we had because you have high value-added products being paid in multiple installments. But we've also increased our payments to customers, to suppliers as well.

We talked about this in our last quarter's call. It is expensive to grow. You have to burn cash to generate more turnover. We're a BRL 50 billion company growing 20% a year. So you need to burn cash for this growth to take place. And now we have the second quarter above 20% growth. Now we will have an increased need of cash. I mean, when you speed up, you have more cash being burned. But when you study the speed, then you have this a slower or a lower cash consumption. So we should have a new cash burn level because of this new level that we have established after these 2 quarters growing 20%.

Next up, Vinicius Strano from UBS will ask his questions.

I have 2 questions. First, about gross margin. It was a positive surprise to us. If you can tell us a little bit more about the improvement in the GLP-1 category. And also, if you could give us more color on the drivers of the commercial gains of 40 bps offsetting the mix effect that you mentioned on the release? And also, if you can be more aggressive on price in other categories. If you can give us more color on that, that would be great.

My second question is about the expenses. What should be the impact of the labor law change in which the employees would work 5 days per week and rest for 2 days instead of 6:1?

Thank you. Thank you very much for your question. About margins, there's no silver bullet. It was many different things that allowed us to grow so much on the GLP-1 category. To invest more in HPC we were removing or decreasing the discounts on medication in the digital channels, and we were able to do that without harming the growth of the digital channels with 30% share.

And also, we have to negotiate with the suppliers every single day, which is brilliantly done by the commercial department. And also there is a distribution center in [ Igrejinha ], which greatly improves the distribution to other distribution centers in different regions with a service level that is much higher with lower inventory. And also, there is a tax gain related to that. So there are many levers, many drivers. There was a loss and that improved to 0.1 or 0.2, and there's still a lot to be done there. So there are still value generation drivers going forward.

We are also starting a process with a consulting firm to help us with pricing so that we use more science and invest in the right places. There's another project, a restructuring project in part of our commercial processes. So there's still improvement to be captured. But what's most important is that we cannot lose our price competitiveness. We've always said very clearly that it is a nonnegotiable, and that is part of the reason why we are growing by 150 bps in our market share. It is a priority for us. And of course, we don't want the gross margin to go down, but we are not anxious to grow our gross margin so quickly that will harm our market share.

When it comes to scale and to days of weeks that our labor is going to be like. Our team is already working 5 days per week and resting 2 days. 100% of our operation is already operating like that. We were able to maintain and even decrease the selling expenses, as Flavio said. Although we increased the number of pharmacies and staff benefits, our staff is working 5 days per week and not 6. And still, the selling expenses are under control.

There are very few pharmacies that close on Sundays. And in those cases, they have a staff that rests only on Sunday, and they work 6 days per week then, but that's not even 5% of our staff, our pharmacy staff. 95% of the staff is already working only 5 days per week. So that has been well absorbed by us.

Now one next step that can impact us is the reduction of work hours from 44 to 40. I believe it is a major change for employees, employers and the Brazilian economy, and it should have been discussed more calmly instead of having such a surprise all of a sudden. Still there will be a transition period, and we will be able to adapt.

Most of our pharmacies operate from 7 to 23:00, to 7:00 a.m. to 11 p.m. If we're going to have 8 hours, 8 work hours and 1 hour lunch time, people will stay at work for 9 hours. If we got here in the morning, worked for 9 hours, took a lunch break of 1 hour, and then I relieved Flavio after that, we would have 18 hours of operations. It's more than the 16 hours that we have right now. So we are going to lose the overlap of our staff in the middle of the afternoon.

And in the pharmacies where we have full pharmacy service, we need to have a pharmacy there during the other pharmacist's lunch break. And in those cases, we will need an adjustment in our workload if we didn't want to increase our staff in the pharmacies at all. Still, we are operating from 7 to 11. It could be 8 to 11. But the advantage of having so many stores is that we can choose some pharmacies to operate from 7 to 10 and then others 11 to -- 8 to 11 rather. So there will be an impact, but it is not going to be a catastrophic change, I think. And I believe that we'll be able to absorb part of that change.

But the first step has been taken already. Our staff is already working 5 days a week, 85% of our people approve of that. 3/4 of our staff preferred to work like that. It's all been absorbed by the expenses. The service level was not impacted. Our NPS is at 91, as you saw. So that first step is behind us.

Just as a complement, what happens here, Strano, and Raduan described how the staff is working in our pharmacies. And the pharmacies are at a maximum efficiency level right now. And that, of course, entails cost. Another way of thinking of this is that if the personnel cost is about 10 points of our expenses or 10 points on our sales, if we have an increase in the hours, it's a 10% increase.

In the worst-case scenario, we are talking about 10% in a number that accounts for only 10 points of our P&L. And of course, part of the issue is related to what Raduan said and most is absorbed. But the part that is not absorbed is bad because it has an impact on the profitability and that needs to be passed on, for example, in prices.

But on the other side, on the flip side of this, it is going to give us some value. We are the most efficient player in the chain and the personnel cost accounts for less of our P&L than the competitors. So that takes the weight off of our shoulders if we think in relative terms. And as for the first question, when you asked the question, maybe you were referring to some comments in the market related to one-off situations that pictured a higher gross margin. Those situations are related to tax changes impacting the suppliers. And as they impact the suppliers, they have an impact on the inventory. So that is a one-off effect that happens.

But again, it is a one-off effect that happens when there's a tax change. And it happens every single quarter. So we don't see that as a situation that pulled the profitability up or down in a different way than it would in any other quarter. And that's just the additional comment that I wanted to make.

Next up, Irma Sgarz with Goldman Sachs.

I just wanted to ask a question about the ICMS tax in the state of Sao Paulo. You've already touched on it. You talked about the impact on the working capital. I know it is not a permanent situation. But if you can give us more color about the implementation of that policy, which started in January for medication and in other categories, it came into force in the 1st of April -- on the 1st of April. And I imagine that it had some impact on your systems, your pricing. So I would like to know more about that, if you can give us more color.

And also about the movements in the competitive landscape. Maybe the smaller chains will have to deal with higher complexity during the transition period. And maybe that will be added to other market trends such as the labor law change that you just mentioned. Maybe all of that will help you gain even more market share.

And my second question, Raduan, I think you mentioned it already. You said that in March you hired a consulting firm to capture more efficiencies and help you with pricing and promotions planning. I know it's early, only 2 months have passed since, but if you can share us some lessons that you have already learned, that would be great.

I can start with the second one, and Flavio can take the first one. Well, we are still in the diagnostic phase. We are still designing solutions. Indeed, we have already learned some lessons, and it is clear to us that there are avenues to improve our prices and be more aggressive in some SKUs and categories that are going to create that perception. And at the same time, it is clear also that we can divest in some things and not impact the customer perception.

We are very confident with the science behind it and that there are paths forward. We have not generated any value yet reflected on our gross margin. We have just started the diagnostic phase. We are still proposing some adjustments, and we are going to start implementing them gradually in the next quarters. So the gross margin that you see today does not reflect any gain from that, okay?

Okay. Now as for your first question, Irma, the change in the ST tax in Sao Paulo indeed happened for some categories in the beginning of the year and then later for HPC. It was a point that we didn't even discuss here internally. Indeed, it can make the lives of the smaller chains harder. But what we see out in the field in terms of price competitiveness, we have not seen any change because of that. If there is any internal complexity, they have been dealing well with that.

For us, the systems have already changed and adjusted. We are on a cruise flight mode right now when it comes to that. And medications account for 45% of our sales. HPC accounts for about 25% of our sales. So it's a significant slice of our results now running on the ST model in Sao Paulo, which is the main state for us. So we're talking about a very high financial value.

The commitment that we have with the state is that we are going to receive those amounts in the next 12 months. We started with 24 months, but that number went down to 12 months, but that's not super-defined, it can be flexible, and it doesn't have such a big impact on our result. We are going to receive that amount back in monthly installments. But also at the same time, we are going to start selling those products, and we have to pay the ICMS now. So although we are receiving a payment, at the same time, we are paying for the product that is leaving our inventory. So there is a gap, but that effect is very small.

When it comes to cash flow, in 12 months' time when the key has turned completely, it is going to be positive in our cash cycle because we are going to pay the tax when we sell and not when we buy. But when it comes to our everyday operations, it's not going to have such a big impact on our operations.

Next up, Mauricio Cepeda with Morgan Stanley.

I have 2 questions too. The first one is about the CMED index adjustment, which was below the inflation for this year. It would be helpful if you can give us an update on the discounts across the chain, if the industry has already reduced the discounts and if you did the same to keep the contribution from the different SKUs. And also, if you think that there can be a pressure on your gross profit because of inflation, that would be great.

And the second question is about HPC and your agreements with the suppliers. It is evident that you are growing, but you don't give us many details about your margins. In the Investor Day event, I understood that there was very little effect from that on your margins. But in general terms, can we attribute that to your agreements with the industry? Is it a win-win model? Or is there any risk that the suppliers will see it as pressure and they end up favoring other channels and not the pharmacies?

Thank you for your questions. Well, I believe that, that was very smooth. The adjustment index will be about 2.7. It was very well absorbed. We did not have any sharp reduction in discounts. We always wait a little bit. We do our market research, see how the market is behaving, and we make our movements responsibly, keeping our competitiveness, of course. So the price adjustments were marginal. Our performance is still as we want it to be. So we don't see any need of making huge adjustments. Let's take a look at the market, see how it goes.

We don't think that it was a problem at the end of the day when it comes to adjusting prices, the CMED index at 2.8%. But we do know that we are going to have adjustments for inflation. For example, when it comes to personnel expenses, it should happen in June. And I'm sure that those adjustments will be more in line with the inflation, about 4.5%. It's good that we are growing so much because that helps us dilute expenses. It is also good to see that we have an efficiency culture all around our company.

I said in the past that the adjustments made to the corporate department seemed like a one-off event. And I told you that, that was a new moment in our history. We were much more focused on efficiency and capital adjustment. And that was also what caused the cash and inventory cycle to go down by 10 days and also some movements we made in our invested companies. We are much more focused on efficiency, which will help us offset that gap between the price increases and the cost increases adjusted by inflation.

Now as for HPC, we always said that the HPC margin was between 30% to 35%. It was already within that range, and it still is. There was a marginal loss because we invested. But still, it is one of the healthiest categories when it comes to margins. We are still within that range, as I said, still very stable, very healthy for us and the suppliers as well. HPC is no longer a subject talked about internally by the organization in our meetings and how to do it and find suppliers, having meetings with them and visits and also how to deal with marketplaces selling the same products. But now it is so stable, and we are keeping investing in it.

It's not a big topic, and it's still big for the commercial department. I hope it will continue to be so. But it's no longer a big battle that the whole organization has to fight. And right now, we are very happy with the path that we decided to go on. Our performance is healthy. The margins are protected. And we think that the situation is also good for the suppliers.

Before we move on to the next question, if you allow me, did the suppliers reduce the discounts on medications because of the adjustment?

There was a slight adjustment in the discount. We are running at 75% of the CMED index. So there was a 25% discount. There was just a slight adjustment, but it was not relevant at all. Going back to your original question, Cepeda, that adjustment that was below the inflation putting pressure on the P&L, we should remember that the adjustment last year was 2.1% or 2.3%. It was so low indeed that it was lower than this year's increase, which was already low. So it's something that we know how to deal with, been there done that.

Now Danniela Eiger from XP Investimentos is going to be asking a question.

I've got 2 quick questions on my side. First, can you share with us what your conversations have been like with the main pharma industries have been in terms of timing and percentages. And when we look at the digital front, the Raia consumers see there was a change in the shipping costs when it compares to the price of the order. As of a certain ticket, it became more expensive and BRL 6.99, it probably changes or varies from region to region, but BRL 6.99 is only for more expensive orders. We see this is still a very competitive environment in the digital front, especially in HPC. So I just wanted to understand why there has been this change and why we see these changes in the result, if there are any impacts.

All right. Your first question. You said generics, but I assume you're talking about GLP-1 and similar drugs, right? Well, this is really fighting the flames here of more competition. We see that all suppliers are trying to capture the start of the treatment, be it similar drugs or other competitors. The product was launched 2 years ago, right? And the market leaders have established themselves already. So there are incentives in the start of the treatment, so buy two, get the third free. So you see this natural competition of who is going to be chosen for the start of the treatment. So we do see this happening.

We see that this is reducing the average price at the start of treatment with semaglutide and other molecules. And we see that in its wake there are margins that are slowly but surely becoming more or healthier for us. So the more competitors, the more they will be fighting for the end customer, and that is good for the end customer and it's good for the distributors as well. The distributors in this case are us, of course.

As for shipping, we have a 40-minute delivery time, charging BRL 6.99. This is, well, almost a gift, right? We're not a nonprofit organization here. So we have the 60-minute delivery time, and we have made some minor adjustments, so BRL 7.90, BRL 8.90. Of course, if you have less than BRL 50 in your order, then you would need to be subsidizing the shipping too much, and that would be impacting the end margin. So then you have to increase the shipping a bit so also as to stimulate people to buy more and increase that order.

We understand that the value proposition of our delivery with this BRL 1 to BRL 2 increase is very attractive. And this is cheaper than most marketplaces will apply other than who -- those who are prime or anything special. Well, this is a test period. It's a pilot. So your region is a region that is piloting the test. This is really a pilot that has just begun and it will slowly but surely be applied to the whole of Brazil, but thank you for your preference. Thank you for using our app.

Tales Granello from Safra.

Well, you mentioned about -- you mentioned GLP-1 and the incumbents and the new players should see change there. Do you expect a slowdown in the second half of the year? What are your expectations for the future in this category? When it comes to growth and penetration.

And as for the gross margin, on the Investor Day you mentioned there were 20 molecules that had been approved for you to have your own brand, your private label. Can you give us an update on that? I think this is an important lever for the gross margin.

Well, about GLP-1, you have newcomers in the market, but there will be more access. Again, this is an access that is -- or this is a share that is stable. We don't see much growth month-on-month, but there was some intermittent supply. Now with newcomers and better supply, we expect to see an increase in our share at a little slower pace.

There's an important point here to be taken into consideration. If prices go down, we lose share. I was looking at these data recently. And of course, we have an unproportionately or disproportional share in A and B tiers, right? We have 52 million customers, only 8 million are A tier. They're about 15% of our base. So 85% of our customers, over 40% of them are non-A. They are either B tier or lower.

No one services B and C tier as much as we have. Even though we carry the reputation of servicing A tier better, I mean, after this 8 million, we have 48 million that are non-A tier. And these are the ones that are going to be joining the official or the formal GLP market more. And this is the potential that we see with this increase in the masses going from the informal into the formal market.

Again, this is difficult to detail. There are studies by McKinsey and other studies that show that there will be a long run up to 2030, and this category could account for up to 20% of the revenue of pharmacies. It doesn't mean it is going to get to 20% nor that it will represent an increase of 3 points a year. It could be a bit erratic. It is quite stable right now, but I do expect some improvement in the course of 2026.

And remember, Mounjaro just got here May last year. That was the first time we sold Mounjaro. Now in the next quarter, we will have a base from GLP-1. In the third quarter, it's going to be even higher, in the fourth quarter, even higher. So there should be stronger numbers.

Well, you mentioned the exclusive brands. RD Day last year was a day where we launched this initiative. We mentioned our interest. This is still taking its first baby steps. It's not yet performing. So we don't have much to share about it at this point. But I was speaking to Paulo yesterday, he is from our expansion team, and we're trying to quantify the situation, the different clusters, the different audiences, target audiences that we have.

We are highlighting the A tier and B tier, but we also have the other tiers that are serviced by us. Out of 3,600, we have 600 that are low income, low-income areas or low-income audiences. So if you look at our low income, we would already be one of the biggest in Brazil. And then you have hybrid stores and high end. So we understand we are a preferred channel.

Now we'll listen to Bob Ford from Bank of America.

The new PDV systems in cross-sell and upsell. Do you see any expectation to increase a point of sale?

We remember we had mentioned this. We rolled it out. We changed the totems that we have at the counter. This is a system that is improving. There is more efficiency. It's a lot easier for you to get information as a customer for you to look at industry programs for you to have the items in your basket. So it is quite good for that. There is AI embedded in it. This AI will understand what the profile of the customer is and will make AI suggestions so that, that can be even better for that customer with targeted recommendations. So we see AI put in practice with the 60,000 people at the POSs.

And oftentimes, people don't remember what they bought with the previous visit. And this is a system that helps them recall that, for example. So it's going well. It's far from achieving the full potential it has, be it in efficiency, be it in customization. So we can still go a long way, but we needed to roll out and train people in the system. Now we've rolled it out. We've trained people and we'll continue to improve.

And as for consolidation, well, this is the year where we had the most closures. We see the main chains are increasing their share over the smaller chains. So the smaller ones are not really enjoying this tailwind from GLP-1, they don't have investing power to create digitization, to go digital and have an app, so they lag behind. We have higher base interest. So this also makes it harder for smaller chains, for smaller companies to compete. So I understand this consolidation will continue to take place, and it has been accelerating in the past 2 years. But we get more share in the total market, and we also get the share in comparison to the bigger chains.

And now our very last question, Marcio Osako from Bradesco BBI.

I've got 3 questions. The first has to do with the CMED index. When it comes to PIS and COFINS taxes, well, that should have an impact of 1 percentage point, right? And how does that impact your business?

The second has to do with HPC. Do you understand that the

[Audio Gap]

HPC income from the first quarter was a weak comparison basis. So

[Audio Gap]

the rise in the coming quarters should be lower now in comparison to the first quarter because the first quarter over first quarter wasn't a good comparison.

And the third question has to do with the gross margin. What do you expect

[Audio Gap]

in the future, in the coming quarters, you probably have a lower pressure, say, from GLP-1, but also digital -- well, that is still a pressure, but it's lower than it has been. And you mentioned the losses there. Yes, these are basically my questions.

Let's start with the gross margin. We're quite stable, I would say. Looking forward, there's nothing that would drag this margin up or down. We don't have any structural difference to the, well, competitive landscape in the past quarters, including this current quarter, anything different to what we had seen before. Our gross margin is just stable.

As Raduan said, we have a challenge here with the losses. The losses play an important role in our gross margin. We have improved a number of structural initiatives in comparison or regarding the losses when it comes to shipping items and distribution centers and transport, all of that has been improving. And we have finally started improving our loss level as a whole. But the flip coin, the flip side of the coin, which is robberies and, well, we still see that take place in our stores. So the losses are still high, but the losses dropped 10 bps.

And looking forward, we don't expect any factor to lead to major changes. Specifically, when you think about the quarters and the halves with CMED at this point at 2.8%, that hardly impacts the situation. So when CMED was higher compared to inflation, we were able to have better results, bringing forward our acquisitions. But now the volumes have to be very substantial in volume for us to have a substantial impact. So really, operationally, we can't work on this volume.

So when it comes to CMED, the effects could be similar to what we had last year. We can't promise anything, but it's something like that. Would you like to talk about HPC and growth?

Well, HPC grew less last year. But it doesn't mean that the sales numbers were low. HPC was 25%. It just grew less in comparison to a year we had grown a lot. So we were looking more on the quarter-on-quarter comparison. We understand it's a healthy growth level. This quarter it was 11%, but it's impacted by the seasonal categories that have no impact on the second quarter. So we understand it should climb back to normal levels. So again, this is not something we understand to be underperforming. It's in line with our expectation.

And as for CMED, the PIS and COFINS taxes, CMED grew more in states where we had this tax situation to offset it somehow. So we're talking about 1.2% due to this different tax burden. So in the end, it's neutral.

And this is the end of the Q&A. Now we're going to have our final remarks.

Do you have any closing remarks, Flavio? No, it's just that I know that you have to leave quickly today.

Well, I just wanted to make some final points. We're talking about extremely strong results, BRL 2 billion in revenue, 200% -- BRL 200 million EBITDA and BRL 120 million in income. I would be very happy to be an executive in such a company. Now BRL 2 billion, BRL 200 million, BRL 120 million, that's just our growth. It's not our net profit. It's just the size of the growth that we had in our revenues, EBITDA and income.

BRL 2 billion, BRL 200 million, BRL 120 million. Those numbers speak for themselves. And that comes from consistency, delivering expertise and strengthening our core business, being efficient. We are not a B2B company. We are not a publicity agency that grows by 20% because we landed a new account of a big organization, and that's why there was that big leap. No. We don't take that shortcut.

No, that happened because so many people are coming to our pharmacies, approving of our choices of how to take good care of them without silver bullets or working miracles or anything like that. It's just about being consistent, believing in our people, believing in our digital channel that's improving day after day. So the numbers really speak for themselves, and we need to be proud of our solid results.

And of course, we need to continue to pay attention on our cost efficiency discipline. We have been very disciplined in managing our expenses, but we also need to save money on what's worth saving money. We increased our staff in some pharmacies. We improved the proposition in some distribution centers for our staff in the centers. And we are also investing in technology and AI. We have a number of use cases that are advancing. So we are keeping the discipline, efficiency, sustaining operations that get better and better and investing in the company that we want to have in the future. That's why we are so happy about this quarter's results.

They paint a very fair picture of what the company is and what we will be in the future than prior results. We are very happy about them. And once again, I would like to thank the 75,000 people who come to work every single day, working for our company, delivering their very best to the customers. I would also like to thank the investors, those who have always been able to believe in us despite results that were not so good in the past.

And we're talking about fantastic market share gain here, 150 bps. And Flavio said that I had to leave. Let me talk about that. And here in Brazil, we had a boxer Maguila, and I'm going to do the same as he famously did once here in Brazil. I'd like to say happy birthday to my daughter. She's turning 15 today. She's my princess. So happy birthday to you. And also my wife, it was her birthday yesterday. I'm not going to mention her age, but I'm turning 51 this month. So it's more or less in that ballpark. So thank you very much and a big kiss to my wife and my daughter and see you in 3 months.

Thank you, Renato and Flavio. Thank you very much for joining us. And this concludes today's RD Saude's earnings call for today. Have a good one.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Hello, everyone. Thank you for standing by, and welcome to RD Saude's Fourth Quarter 2025 Earnings Conference Call. This presentation can be found on RD Saude's Investor Relations website at ri.rdsaude.com.br where the replay for this conference will also be made available later. [Operator Instructions]

Before proceeding, I'd like to mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of RD Saude's management and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions, as they relate to future events and therefore, depend on circumstances that may or may not occur. Our investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of RD Saude and could cause results to differ materially from those expressed in such forward-looking statements.

Today, joining us from the RD Saude Studio are Mr. Renato Raduan, CEO; and Mr. Flavio de Correia, CIO and Corporate Affairs Chief Officer. Good morning. Turning it over now to Mr. Renato Raduan.

Hello, good morning, everybody. Thank you very much for joining us in the 4Q, '25 earnings call. We're here to take your questions, give an overview of the business and do our best to clarify any questions you might have. Flavio, how is it going? I expect a lot of questions. I hope you had a good night's sleep Flavio because I believe we're going to have many questions to take at the end. But before that, we are going to go over our presentation and leave some time for Q&A.

Usually, in our earnings call, we talk about the highlights of the fourth quarter, but since we issued a material fact notice yesterday, you probably have many questions about 4Bio. And I don't want to delve too deep into the 4Q results. And all the while you will be thinking about the material fact. I'm going to give you an overview of why we have this deal with ProPharma. And then we are going to go over the fourth quarter and take your questions.

I believe you are well familiar with 4Bio. I think it is worth explaining why it is such a successful venture. It has a very differentiated proposition in the specialty retail business. It provides the customers -- a very different service to the customers. A last mile service and also a customer service, a customer-centric service, I don't know which camera I'm talking to. That's why 4Bio was so different from the competitors.

Another differentiating factor was the human-centric value proposition that it has. And that is part of the reason why it grew so much over the last years, going from BRL 125 million -- that's the number we had the year before we acquired part of the company, and it reached BRL 3.3 billion. Now let me explain to you why we thought it made sense to sell the company. And then I'm going to talk about the financials.

What changed in recent years is that the market changed with the pandemic, with medical loss ratios getting higher and operators, carriers became much more price driven due to financial needs. So all the value that we added to the business was no longer the interest of the carriers. They became much more price-oriented. And then the market started to operate on a reverse auction basis with hospitals putting more pressure on prices. So the business characteristics changed and the most relevant factors involving 4Bio became last revelant. And in a business that is much more price-oriented there are owners that feel more natural for this business that could add more value to it than we can.

What we had with 4Bio was a cultural fit and a true belief and delivering a different value proposition. But it no longer makes such a different difference in this market. The tax designs should be more efficient. And we believe that a wholesale company like ProPharma can add more value to a business like 4Bio. That is one side of the equation. We understood that 4Bio would be more -- would be stronger competitively with ProPharma, and a company like ProPharma than a company like ours. And also on RD's side, we realized this year very clearly that when we invest our energy and capital in what we do best, which is pharma retail, the results are great, as you're going to see in our 4Q results. When we invest our energy where we have most competencies, we have great results. So this is about focus for RD. That was the rationale behind our strategic decision to go forward with this deal.

And financially, it also seemed to make sense. The deal, as we explained to you was at an amount of BRL 600 million with BRL 8 million in cash. So net, it is BRL 520 million. And it is the price that ProPharma is paying. And we believe that it makes sense. We believe that they are going to be able to increase the size of the business. Of course, if you look at our multiple of our net profit in the last 12 months, it would be a multiple of 6. And we ended the year with BRL 72 million, so the multiple is actually 7x. And ProPharma is paying BRL 520 million, but for us it's going to be worth BRL 700 million because we have rights to receive payments.

For example, sales tax rate differentials, we are going to receive that money over time and also BRL 60 million in income tax. So for us, the final balance will be BRL 700 million, and we invested BRL 400 million in this asset over time. With primary and secondary stake we paid BRL 400 million, and the IRR is close to 17% with a multiple of almost 10x. We believe that this business is worth more to someone else other than us, and we believe that this is a win-win deal. This is the overview of the strategic decision that we made to sell the business and also the economic rationale.

I believe that I have now addressed part of your questions about the deal. But at the end, if necessary, we can take more questions about this. And now I would like to talk about the 4Q results.

The numbers were very solid, extremely strong. And in normal conditions, we would be proud of these numbers for sure. But I believe that these numbers become even more important and greater if we consider the starting point that we had. The beginning of the year was very difficult. The end of last year was difficult as well. And to get to the fourth quarter with such numbers starting with such a bad starting point. I believe this is reason for everybody to be proud.

We had 3,547 units in operation. We opened 330 new stores with an IRR of over 25%. So this is a very good expansion moment for us in terms of quantity and quality. And it is going to help us be stronger and stronger, and more capable of consolidating the market in the future. We reached 52 million active customers, which is 1/4 of the Brazilian population. And we had 440 million tickets. It's like every Brazilian person bought twice in our stores. But it's actually 42 million people going to our stores on average 8x in the year. And the NPS was [ 91 ]. It is a record-breaking number for the company. I know that it's hard to go to [ 93, 95 from 91 ], right? And we should remember that this NPS is at a very high level. And in order for us to keep such a high level with so many tickets, it's absolutely fantastic.

We also had another record-breaking number in the period of 12 months. We had 170 bps of market share gain. We are changing the metric from the manufacturer price to the consumer price. But even considering the previous metric, we would have 180 bps in market share gain. We don't recall reporting such a high market share gain in any other earnings call, and that happens across the board, across all regions. And of course, GLP-1 drugs have a major effect on this, and we take pride on it.

We mentioned earlier, in earlier calls, that we were prepared to serve this wave. But even if we exclude GLP-1 drugs from this market share gain, the gain was 100 bps. So it is a record-breaking number. Our digital revenue came to BRL 11.3 billion. I believe we grew by over 50% for the third quarter in a row, and our retail penetration was 29.3%. And we also had an NPS that broke out records on digital channels. And of course, the performance is a natural consequence of our delivery of our execution and everything we provide to our customers.

The consolidated numbers look like this. Gross revenue was BRL 47.6 billion, with a growth of 14% year-on-year. And in the fourth quarter, it was 19.8%. Our adjusted EBITDA was BRL 3.4 billion, and our adjusted net income, BRL 1.3 billion. And of course, those numbers were the result of a great extraordinary performance in the third quarter. And now let me show you the details about retail.

Gross revenue in Retail was BRL 44 billion. We grew by 22.3% in retail in same-store sales, and mature same-store sales 14.5%, and 11.4 percentage points in relation to cement. And our EBITDA grew by 41.2% in 4Q, '25, reaching almost BRL 1 billion EBITDA, and a net income of BRL 1.2 billion. So looking at the highlights, you can see that this was a very strong quarter.

And [ isolatedly ], it would already be very good. But if we consider the starting point and everything that we did over the years, this is a great achievement. We started the year growing by 10%, 12% -- 12.7% in 3Q. And in 4Q, we grew by almost 20%. In retail, we grew by 22.3%, as I said earlier. And we were able to grow so much without letting go of our gross margin. Although there was a lot of pressure from GLP-1 drugs with a smaller margin we were able to grow, keeping our competitiveness with prices, and we only had a loss of 20 bps in gross margin. We were able to dilute our SG&A and especially D&A expenses, and that is part of the achievements that we enjoyed this year, and that took our EBITDA margin to leap from 6.2% to 7.2% after 12 months. And the market share looks just the same with 1.7% growth.

Before I turn it over to Flavio, I'd like to show you the quarter-on-quarter view as well. We had 10.8% and then 11.6% then 12.1% and now 13%. You can see that we had a succession of quarters with growing numbers. And in our core business, in the retail business, although we look at quarter-on-quarter numbers and not year-on-year numbers, you can see that the growth was significant. And the fourth quarter is also a reasonable pride for us because we were able to perform very well in HPC. The Black Friday was extremely solid.

Last year, we knew that we underperformed, as we told you very transparently. And this year, it was different. We had a growth of almost 18% in HPC. Of course, GLP-1 drugs have a major effect here. And even if you exclude that effect, the growth was a double-digit one. And the major challenge that we had with HPC is behind us. We closed the quarter with 18% growth. And if you look at these numbers, you can see why we take so much pride on them.

Thank you, Raduan. Now let me give you more color on some of those numbers. Considering the overall growth of the company of 19% and looking at the breakdown of the 22% growth in the retail business, we can see that the stores have been growing by 16%, which is a very strong result generated by the 330 stores that we opened in the period. And also as important as that growth is the growth of sales in mature stores standing at 14.5%, a record-breaking growth. We never had any quarter with such huge growth, and that is 11 points more than the CMED inflation rate. Of course, this is pushed by GLP-1 drugs and the digital channel as well, which is very strong and HPC, and also the overall results that we had on Black Friday.

Now let me give you more details on the digital channels. Digital reached BRL 11.3 billion in sales. So we surpassed the BRL 10 billion mark. And we had a specific growth this quarter of 78%, and that is boosted by GLP-1 drugs and Black Friday, as I mentioned earlier. So it's important for us to understand the quantity and the quality of these numbers as well. This result, 82% of our digital results came from the app, which is not an open channel. It is a channel used by engaged customers. So it bears witness to how engaged our customers are and how frequently they come to us. Those are all very positive indicators.

Our performance was sizable, of course, but at a very high-quality as well. And we believe that this is a business that cannot be replicated. Our digital strategy does not take place only on the digital world. The digital strategy materializes because of our stores. The stores are the main place where the customers engage with us. The drug stores, the pharmacies are where the customers fulfill their deliveries, and that synergy between the physical world and the digital world is where the strength lies here.

We reached an 80 -- an NPS of [ 80 ], which is a very solid one, very different from the rest of the competition. And we have also a high number of deliveries happening in less than 1 hour. Concerning market share, we have a new methodology as of this quarter. We've been using price to the consumer, not to the plant. But regardless, our pre price, or customer price, show a very significant growth observed in the year. [ 1.7 ] market share gain in the period throughout the country.

This is a record-breaking number. We have never grown that much in recent years with some important highlights. 3 percentage points market share gain in Sao Paulo. Sao Paulo amounts to 1/3 of our sales. And it means 1/3 of the sales of Sao Paulo, for the whole state of Sao Paulo, which means a lot, having a 3 percentage point increase. 2 percentage points growth in the Midwest. We've been progressing significantly there. And another important point of growth in the Northeast, where we've been expanding our scope of work. This is an indication that we have solidly and robustly expanded all categories, which is [ blue ocean model ] with 10% increase of new stores on a yearly basis. And we closed less than 1% of our stores per year, very solid result in the qualitative data of our market share.

Gross profit year-over-year, it went from 27.7% to 27.2%, aligned with our strategy of categories. We started the year at a difficult level, but we closed the year in a very positive position. We have HPC here with a lot of commercial activity, more aggressive pricing strategy. We have also had an increased share of GLP-1, which is going up to 2 digits. So low double digit for GLP-1 sales, but diluting our gross margin. In addition to CMED effect, CMED [indiscernible] grew less than CMED this year. And this year, there is a pressure of 10 bps. But in the quarter, the loss has led to 10 bps positive balance. All these pressures have been offset by 10 bps and 4Bio sales and others. In other words, we've lost 50 bps of margin throughout the year, but they were all offset within the quarter and neutralized in the year, thanks to improvement in selling expenses and G&A.

Selling expenses. Even though there were a number of pressures leading changes from 17.4% to 17.5%. In 2024, we had a [ weak ] basis of people. Our head count was not enough. And throughout the year of 2025, we've replaced most of our stores' staff and also offered more benefits. This is a pressure that impacts selling. But in the last quarter, thanks to all our adjustments, we had a dilution over what we had last year going to 17.6%. So structurally speaking, we are doing okay.

And G&A, as a result of all the decisions we made in the first quarter, pictured in the second quarter. Our structured G&A went from 3.1% in 2024 to 2.6% in 2025. This level is very solid, stable. We do not expect it to go up. This will be our steady state, so to speak. It means EBITDA margin of 7.1%, [ 0.10% ] below what we had the previous year. But offsetting all the pressure imposed on us in the first half of the year. The fourth quarter had a margin of 7.2%, 1 percentage point over what we observed in the fourth quarter last year of 2024. EBITDA of sale -- of retail as we are going to work just in retail, EBITDA [ ex 4Bio ] was 7.5%. This is the number that we have to have as a reference from now on ex 4Bio. Cash cycle was positive. There was an improvement in the number of days in the cash cycle coming from a 5 days inventory level drop year-over-year.

Let me go into details on the financial elements, and I believe more questions are going to be asked concerning that. Maybe something that was not there in our release. Our financial expenses was BRL 250 million in the quarter. But financial expenses is structurally higher than in previous quarters because of one specific entry in financial revenues, which result from our supplier finance. Expenses, which were not accounted for in the first quarters and were all concentrated here. It's about BRL 17 million, BRL 18 million in the operation. The results should be increased by BRL 18 million, and the [ previous one ] should be deducted of the same amount.

As a consequence, in our net profit, which was BRL 360 million in recurring basis, the BRL 360 million would be BRL 380 million. Set that explanation and making it clear now. Our financial expenses impact the results of the year, going from 1.3% to 1.7%, 40 bps increase, but aligned with higher interest rate in 2025 and higher debt levels because of [ AVP ] and because of a comparison basis of previous year, which was somewhat disproportional. We have really observed that difference.

Part of that pressure was offset and recovered in the interest rate because of the profit sharing compared to 2024. And also because of some subsidiaries that we improved. It means 2025, we had net margin of 2.8%. If we revisit 2024 with all that one-off gains that we have observed and have led to a reduced number here and less financial expenses. Our recurring net margin would be 2.8%. Maintaining the year of 2025, very much aligned with previous year results, considering, of course, all the pressure that we were submitted to in the first half of the year. Another important point that you always ask, what is the recurring interest rate the year? 11.2% for the year, and we expect to have a recurring interest rate level of 8.6%.

Positive free cash flow, as you can see here, with positive results and BRL 197 million, with a total flow of BRL 175 million negative. For two specific situations. When we speed up the car, it means we consume more fuel. This is what happens in the last quarter. We needed more cash to perform in our operations. But if we are getting to a plateau and this is going to get stable. And also because of dividend distribution at the end of the year, BRL 113 million to optimize the tax opportunities.

Well, to wrap up and then finally go into questions. If you were with us in the RD Day in beginning of December, you have seen this slide. We talk about our current position and where we are heading to. We saw that we spent a whole year of 2025 on recovering our performance, a performance that really portrays the assets that we have built through our time. The last quarter of '25, first quarter of '25 did not really show what our company currently is. So throughout 2025, we tried to recover our performance, value proposition, reinvestment in price and competitiveness, logistics, inventory levels. We invested a lot on our pharmacies, offering a greater value proposition to people. We really focus on HPC, improving customer experience. And I believe we've succeeded that can be translated through the NPS.

It has all been funded with expenses with discipline. So we adjusted G&A we focused on inventory levels and losses. So now they are at much more acceptable levels. And in addition to that, as I've emphasized, we're focused on obtaining G&A efficiency, but also optimization of investments and capital allocation. The total of efficiency was not only for our recurring corporate infrastructure, but rather everything that we were doing in terms of investments of capital, and it has really improved significantly.

The 4Bio transaction is not in isolation. It's part of our reanalysis of capital allocation 4Bio sales is exactly part of that focus on the core that we've had throughout the year. I said that once we have achieved the level that we had envisioned, which is exactly our current position. We would go into level where the whole management and the executives could rather focus on something else rather than focusing on recovery of performance.

Now we are taking one first step and moving ahead, adding additional layers to create stronger modes. We have revisited our strategy. We have very much clear -- clarity on the most relevant segment of customers that need the pharmacies. We have paid attention, listened to their concerns, what would be important for them in terms of value proposition, and how we can resort to our own assets to achieve that. So focusing on optimizing our culture of efficiency, evolving in the use of AI, allocating capital to where we have the right to win with our competencies lie. And we are going to keep on accelerating those different elements. And this is going to take us into a cycle of gains, which is disproportional really. Exceptional. Not only because we are reinforcing and establishing our moats, but because of market elements as well.

GLP-1 is going to be part of that. It is a growing relevant segment for the future of pharma retail. And we have the right of having [indiscernible] here that has been built throughout the dockets. It is going to really mean a lot to us. We have more investment power than our competitors. Our [indiscernible] is [ 3.4 ]. BRL 1.3 billion is our profit range. AI technology will be essential for successful companies.

We have an investment power in technology and AI, which is much higher than our competitors. The more digital our customers go, the better because we have a competitive advantage in terms of our digital solutions. And our -- the experience of our app is very similar to the leaders in this area. So there are a number of market factors combined with all our strategy and focus in terms of proposition mode that will take to greater shares.

Of course, this is an ongoing process. As we improve value proposition, we are going to get more -- gain more scale and share -- the more share in scale, the better our performance and investment power, more we can invest in people, in value proposition to customers, the more we invest, the more we accelerate gains of scale and share and so on and so forth. This is the flywheel, which is going to take us to even greater gains in share because this is all built up on our years of history. We have been also in our venture for 15 years, the merge of our 15-year merge, emphasizing all the elements of this strategy.

Well, now we are ready to answer your questions related to 4Bio, to the quarter, to the year. Anything you need to know to understand better our business. Thank you all very much. Let's now open for the questions.

We have here a good cop bad cop strategy. We tend to get sometimes questions that go very, very deep. So please let's ask one question at a time. One question per participant. So please focus on your most important topics of interest.

Thank you very much, Raduan and Flavio. Let's now open for the questions and answer. The first question is by Luiz Guanais with BTG Pactual.

You see Raduan, concerning what you've just talked about GLP-1 opportunities, could you please tell us more about what we can expect in terms of working capital? First, with improvement of the supply of Mounjaro. You know how to deal with that quite well, but still it was an issue. And secondly, once you have generics, I believe that it has changed somewhat as of the second half?

And Flavio, when you talked about the adjustment in your financial results with supply and finance, BRL 18 million per quarter, right? So the adjustment of BRL 18 million in the last quarter, but all the other quarters had similar adjustments. Did I get that right?

Raduan now answering. First, I'm going to talk about GLP-1. Yes, it has favored us in working capital. It is -- if it's a product with a short demand. The -- of course, the inventory turn over is very, really high. Customers used to pay cash. And then we had -- we could pay installments to our suppliers. With time, things change. Now we can sell also installments, 6 installments. The terms of our suppliers haven't changed, but as there is no more shortage of the product in the market where we can have higher inventory levels, when we consider the net of the working capital, it will receive some more pressure. But If you consider GLP-1, the working capital cycle will be better than the whole company.

If we have a good management of coverage and inventory policies. But still, it has been creating value to us, to our competitors and more is coming off, of course. It's a lot. It is a market of BRL 10 billion -- amounted to BRL 10 billion last year. If you'll get to BRL 50 billion in upcoming years. We will keep on having over share. Maybe there is going to be some decrease with generic prices may come down, but the average price is [ BRL 40 ]. if it goes from BRL 1,600 to BRL 400, it's still 10x higher than the price of regular medication. So we are going to maintain the over share, of course, and we're going to work towards that.

The adjustment that you mentioned about the financial expenses, they should have been the BRL 9 million in the second and third quarter, as they were not accounted for in the second and third quarter. We entered BRL 18 million in the last quarter. So BRL 18 million is the total number, but the BRL 18 million was a combination of 2 other quarters, second and third quarter, no carryover from the first quarter.

Great. So BRL 18 million is the year effect? Thank you for your answers.

Yes, the annual effect is zero -- within the year was zero. It was just -- those that should have been second and third quarter were not entered. So net profit was BRL 9 million higher. The [ 400 ] on the second and third quarters should have been [ BRL 390 million ]. So the BRL 18 million were launched, or entry [indiscernible] saying in the last quarter. So it should have been [ 380 ] and it was [ 362 ]. It was subtracted. That was the fact in the year, zero net effect.

The next question comes from with Mauricio Cepeda Morgan Stanley.

My question is about your strategy and your focus on simplifying the strategy. In previous calls, we talked about this for different reasons, but now with the sale of 4Bio, it seems to me that you are treating that path of focusing on simplifying the processes. Is it fair to say that you are going towards a pure retail strategy?

For example, reducing the health care services at the stores and simplifying the business in general. And I would also like to know if that open space for you to reduce your G&A and CapEx and have more productivity at the store? Because your staff works on the retail side and also on the services side at those stores, right?

That is a great question, Cepeda. It's all about balance. We are going to focus more on our core, but our core is not pure retail. Our differentiating factors, our value proposition is to be a health care agent in the communities where we are located. We support health care of the people who surround us in our communities, offering added value services to the distribution of medication. So yes, we are simplifying the strategy, especially when it comes to the health care part of our strategy but we still have our ambition to step out of our core business and go towards services and added of things, but it's not the same strategy that we had in the past of pure retail.

Now the segment that we want to address is defined and we believe that they are the most relevant ones. And we want to focus our best assets to offer the best value proposition. And that includes the retail operation. That also includes the digital capabilities that we've built over the years, and it also includes the services, the low-complexity services that the pharmacist can offer at the stores. In the service rooms and also the counter solutions in terms of compliance to treatment and subscriptions as well. So yes, we are simplifying, but be careful so as not to interpret as an extreme simplification. The differentiating factors will be maintained and the digital players will not be able to offer the same solutions that we do. And that is -- remains part of our strategy.

But yes, we do have a sharper focus on health care and digital assets. Especially in the competencies that we have the right to win in. We don't want to steer away too far from our strengths where we can make a difference. And we should also remember, Cepeda, that we are the biggest employer for pharmacists in Brazil, 15,000 pharmacists. Most of our store managers are pharmacists. So we provide specialized service. It's not just selling boxes of medicines to our customers. [ Melissa ], our VP of Operations, is actually finishing her studies as to become a pharmacist. So we are doing everything we can to make this company a health care one which is also a retailer, and not the other way around.

And from our numbers, you can see that very clearly Cepeda. All the customers that received some sort of healthcare service has a higher engagement level, be it health care service, customers compared against those who never had any service at the stores, the lifetime value of those customers is longer. And if we look at those customers' journey, we can see that our role in their lives increases over time.

For example, when the pharmacist get in contact with them to see if the treatment is going well, and we compare the intensity of their contact with us before and after that contact, and the LTV always increases. So in a health care layer that we can add in our territory adds a lot of value, and we become even more important in the lives of our customers in the segments where we are present.

And it's just about sharpening our focus and getting a little bit closer to the core, those areas where we can deliver much more than the competitors can.

And do you think you can reduce expenses because of that?

I think that expenses in general will continue to be diluted over time. I don't see major investments happening in the future. And I don't think that there's going to be a major reduction either as the one that we have this year with 50 bps in our G&A. And I believe that most of that reduction effort is behind us, but we do see a continuous improvement over time.

The next one comes from Danniela Eiger with XP.

Congratulations on the results. My question is about growth. I think was the main highlight. The growth was exceptional this quarter. And what really caught my eye is that the growth happened across the board. GLP-1 is an obvious strength for you, but also HPC was a very good surprise. So many things caught my attention in that growth. And thinking about this quarter since it was so strong, let's look forward and think about the main levers for your growth.

GLP-1 is a very obvious one. But if you can talk about other opportunities, any specific factors that are going to drive your growth, I don't know maybe you can expand your over share because you see potential in it. If you can give us any more color about how you are going to maintain that pace of growth? And what kind of intensity can we consider for the future in the main categories that would be very helpful?

Thank you very much. I cannot give you any specific guidance, but I can give you overall numbers. Well, the sales performance was indeed very strong. We had a market share gain across the board. We gained market share in the market because we believe that the independent players are losing strength because they are not participating in the GLP-1 game, or maybe because they do not go digital. But when we look at the main change we gained market share from them because we strengthened our value proposition. So we won against the big ones as well.

Now we are looking at things less by category, but more by customer segments, the segments that we want to cater to with a stronger value proposition, which is going to make us more important in those customers' lives. Of course, GLP-1 drugs are growing on a starting point that was not so high last year because inventory struggled a little bit. And the second half, the GLP-1 starting point was a little bit higher. But also in the second half, we started to see generics, or at least we believe that we are going to start seeing generics coming into this game.

I believe that we can have a growth base that is going to depend on our aggressiveness on OTC and HPC and the entire medication operation. So we want to grow in a balanced way across all categories, excluding GLP-1. I don't think one category is going to grow much more than the others. Generics grew a little bit more recently because there were two patent expirations that were very significant. But I expect to see a well-balanced growth across the board, excluding GLP-1 trucks.

I talked about the [ 1.7% ] growth year-on-year, but more than 1 point in our growth -- in our share growth came from GLP-1. So it is, of course, important, but it does not account for all that growth. And over the year 2025, we decided to exercise a few muscles that were not so active in 2024 and earlier than that, which is HPC. We learned how to manage the HPC prices more actively and more frequently. We learned how to put products on sale and then remove them from those promotions. We learned how to do things with influencers and digital channels. We used to do that in the past, but not so intensely. And we decided to exercise that muscle and gain strength on that side of the business as well. And that's going to make a difference going forward.

This year is very important for us because we have many public holidays and the World Cup as well. So we need to know how to communicate with those customers effectively. It's going to make a huge difference.

The next question comes from Joseph Giordano with JPMorgan.

I want to talk more about expansion. You said that was a record-breaking growth with an IRR of 25%. So I want to know more about that expansion. We might not have seen such great expansion in previous periods. And why is it happening now? Are you investing in larger stores in better locations? If we look at the industry as a whole, 2025 was the first year where we had a net decrease in the number of pharmacies in Brazil. So I'd like to isolate those factors and understand the picture a little bit better.

And inventory increased significantly. So I would like to know more about that. Is that related to GLP-1 drugs? Or is it just because you need inventory to grow the business?

Thank you very much for your question, Joe. It is a pleasure to talk about the expansion of our store base. I work very actively on that front since I joined the company 14 years ago. The returns have been better and better. The main factor here is the quality. There's a whole science behind finding the best locations to open stores. We actually opened many more stores than the 3,500 stores, considering that we closed a few units. But we are obsessed about managing the new stores very actively. And we also created a toolkit that allows us to apply all the "scientific knowledge" that we have on this. And of course, with our culture, our people, that's the unique factor about us. So our decisions about this are also very qualified.

And of course, we have a great -- we have great skills. We know how to do it, how to open new stores. But that is not reason for us to simply open stores for the sake of opening new stores. Our focus and our criteria, strong set of criteria that we have continues the same. We need to take all of those skills into account and talk about the possibility of opening new stores with a committee that meets every Monday. So it is a process that takes a lot of things into account.

We are not opening larger stores with more parking spaces. What's happening is that we are being even more selective about the places where we decide to open stores. We have smaller stores as well in underprivileged neighborhoods because other stores are closing. So that open space for us to push the frontiers going to underprivileged neighborhoods and also in other towns, smaller towns, all around Brazil.

Another thing that favors our expansion, Joe, is that we created a brand that is strong and renowned all around the country. The fact that we build a brand and a value proposition that is equally recognized regardless of where you are in Brazil favors the efforts of opening new stores. If our brand was only strong in our place of origin, and in other regions the branch was not that strong, the results wouldn't come. So the expansion also lies on the factor that we created a differentiated value proposition all around Brazil. Our competitors don't have the same benefit, and that's why they are limited in terms of expansion.

When it comes to inventory, we had a change in the inventory front. Our new VP of Supply Chain is here with us at the studio. He has been working with us for most of our year and many of the improvements in our logistics chain was spearheaded by [indiscernible] and his team. He used to be a consultant and now he is the leader of that department. He is now part of our family. And I'm certain that there is still a lot of work to be done by himself and his team, and they will continue to reduce inventory, improving our cash cycle. But again, we don't want to see a sharp reduction quarter-on-quarter, or month-on-month. But I do expect to see an improvement. I don't think our inventory level is the optimal one. I believe that it is going to change from now on.

And now the next question comes from Irma Sgarz from Goldman Sachs.

Assuming that the environment for your company and retail and digital platforms in general, will continue to be intense in some categories? Do you think that you need to make more investments in prices and promotions? And what are the efficiency levers in terms of promotions and sales and negotiation with suppliers, you will use to be able to offset that pressure on your margins, on your gross margins in particular?

Thank you, Irma. Well, over the last months, we did not feel the need to invest in more and more promotions and sales. We signaled that we would increase the density on promotional actions to improve our competitiveness. And in the second half of the year, we got to a level that is a little bit higher than the past, but it is now stable. And therefore, we have been growing in HPC at healthy levels. And that is -- is that guarantee that it is going to be stable forever? No. The market might take steps further, and we will react accordingly.

We were able to offset that factor, thanks to partnerships with the industry, with the suppliers, with negotiation strategies that proved efficient. They help us be more competitive, and we were able to do that by finding the sweet spot in the prices. And now we have a project with a consulting firm that specializes in pricing and promotions. And the consulting firm is starting this month to help us be more efficient in investments in gross margin. So I feel very confident that the competition in HPC will continue as it is right now.

And even if we see more aggressiveness from competitors, we are going -- we will make use of the lessons we learned over the years to offset part of the investments, or we might divest in some categories, or regions, so as to offset those effects, which we did last year. We were very fortunate to find the right places to invest and divest, allowing us to invest more in HPC and adding HPC to our performance. So we have been very accurate in our decisions to invest in all of those factors. And we want to be more and more precise about those investments.

Building up on that and sharing some of the figures, our gross margin went to 27.6% in the quarter, 27.6% to 27.4%, 20 bps of drop in the quarter year-over-year. Considering that in 2024, we had not even half of GLP-1 as we have it. GLP-1 alone amounts to the hold solution if we had just this indicator, it would amount and explain all dilution. All effects ex GLP-1 were neutral, or contributed positively to our gross profit.

The market likes to see all the different lines, but I think you'll have to consider EBITDA. What is our strategy? We want to activate stores. Our unit economics based on one store. It's a store with fixed expenses, rental, salary. These are fixed expenses throughout the year. So additional sales will help us dilute our fixed expenses. If thanks to investment in competitiveness, we are bringing more flow and sales, the delta we have is offset. If we do it well, it gets further improved and bring positive results to us such as the third quarter and fourth quarter results.

Next question by Tales Granello from [ Safra ] .

I'd like to talk further about efficiency in your expenses and your new project of stores focused on well-being, HPC. Have you opened any new stores with this new format? In the Investors Day, you talked about it. I don't know whether you have open new stores or not towards that. And what is the performance of the stores? Do they need consultants? Do they need different staff? And how does it interact with your expenses from now on, and the expansion of this kind of store?

Concerning gain of efficiency and expenses, let me give you a general guidance because we expect to maintain this wave of dilution. We focus on efficiency, and we want to have discipline in capital allocation. And these are very strong drivers in our company. We know how important it is. We were very fortunate during 2025. We have delivered excellent results. We've really improved what we expected. Digital practices, for example, we have reorganized our squads and we have evolved so much in the use of technology and AI to develop code that on the second half of the year, we had a smaller number of people but we need, and the support that we had was better than in previous years. Even though we had fewer staff present. And we expect a natural progression towards that. So we expect to keep on improving our OpEx and CapEx efficiency, allocating accordingly our capital, really focus on, we have the right win and where we can have quick returns, but no further additional steps.

Second part, we haven't opened this new pharmacy with a comprehensive extended experience into beauty. We expect to open the first one in the beginning of the next half of the year. It's not only an expanded assortment. It's a different experience. So assortment, layout, service of beauty consultants, yes, health services that can really offer the best. It's a different store, bringing the best to offer for us. But of course, it is going to impact a lot the experience, expanding the assortment of beauty products.

It's expected to be going into the second half of the year. And it's going also to teach us a lot about learnings. So how can we adapt different clusters, how based on the learnings of HPC with a more expanded assortment? What can be learned from it and help us make adaptmentto our shopping mall stores, where we can have more focus on beauty, skin care, more than medication or regular HPC? This is a type of store that's going to teach us a lot for the company as a whole. Not open yet. You are all going to be invited when we open our store, but we expect it to be half of the year.

Next question, Leandro Bastos with Citi.

I have a question about GLP-1. You've talked about the penetration of low double digit, as you mentioned. But considering the market potential and all advantages, that you mentioned for the company in the category, what would be the speed of sales penetration? Would there be a similar kind of gain in sales of GLP-1 or not? That will be my first point.

Secondly, a specific question about supply finance. To understand the nature of this entry, is it something new that you've started just done?

Second part, Flavio will answer. Now GLP. It's all supply and demand. Unrestricted demand. This is what we see. We had 5% market share even before Mounjaro was being sold in the last quarter. We reached our doublet low double-digit number. Can it go above that? Well, it could, or would depending on the supply. We still have intermittent supply by the industry, especially dosage of 2.5 and 5. If in the first half of the year, we have higher inventory levels, probably numbers will go up. Second half of the year, when generic comes into the market, there is going to be broader access.

In the first half, I cannot anticipate what kind of an increase it will be depending on the supply. Demand is a given. If we had higher inventory, we would certainly grow. I would like to thank the main players of GLP-1. They've been working hard to provide product availability. It's been increasing quarter-over-quarter. They've been helping, but there are some global limitations of raw material. It's a demand from all over the world. But it depends on product availability. We will grow depending on product availability.

[indiscernible] and I have been involved in calls, sometimes just 1 hour call to talk about GLP-1. There are just so many layers involved. What Raduan has said is varied to the point. But I'd like to talk from the perspective of [indiscernible] and the right to win.

Our company has been in existence for over 100 years. And its first pharmacy has always been focused on serving the population. Yes, we were opened in the high-income areas of the city. And now we have 3,500 stores within 1 kilometer radius, which just cover a lot of the high income social classes. They are here around our stores million Brazilian consumers that buy from us every year at an average frequency of 8 transactions per year. The most sophisticated consumers, they can afford these kind of products. We have frequency. We have engagement. So this is right to win.

On the suppliers' perspective, we are the largest partner of the suppliers, and they want to sell to us as well. It is a constant dynamic. Concerning supply finance, this is a very simple activity. It is an anticipation of payment to our suppliers, or retail does it no secrets there. It brings a lot of positive results to us. There were some entries which in terms of expenses were not made. The activity contributes positively to our results, revenues and expenses.

In expenses, for 3 continuous quarters, we didn't make any entry. And this is why you're seeing the results, financial expenses, offsetting the previous quarters. In other words, if we had accounted for all expenses, nobody would even notice that because it's negligible. When we add that to the revenues, this is really positive and contributes a lot to our results.

What was -- what were the revenues in terms of supply finance? This is not a result that we share. I apologize.

Our next question comes from Rodrigo Gastim of Itau BBA.

Let me go back to GLP-1. A Specific question I'm going to ask your help to try to understand seasonality throughout the year. It's a new product. We don't have any track record, yes, yet. Just trying to understand how seasonality of the product should be? Have you observed any changes? I don't know if there was a problem of supply, of some of the suppliers? We've heard that from some other pharmacies. Has there been a drop in GLP-1 at beginning of the year, meaning that the second half GLP-1 drugs are used more frequently because of summer time? I don't know. I think it would be interesting to try to understand seasonality of the product and understand the dynamic of GLP-1 in the first part of the year. Maybe nothing has changed. I don't know.

Secondly, about the discount of generics. This week, there was a price reduction. Second, [indiscernible] free. Now that you're going into generics. How are you dealing with that changing prices? Have you already fine-tuned how this is going to be? And how are you getting prepared to that?

Thank you. I don't know, you were -- specialist in GLP-1, wonderful paper you wrote. Great. We don't know that consumers are always getting prepared to go to the summer vacation, getting -- trying to get slimmer and all that. But it's difficult to predict anything because there has been always a shortage of product throughout the year. So we don't know really how demand oscillate or fluctuates.

It's not because of demand, but rather a supply based on numbers, I wouldn't be able to infer any kind of seasonality. Maybe before the summer season, there would be an increased demand similar to other characteristics of cosmetic and well-being, I don't know. But the gains for well-being, for sales team are just so significant. And people say, I've seen what my friends have experienced, they feel much better. These are real life world, real-life examples, and that will go beyond the idea of winter, summer. I believe people are going to have continuing treatment with GLP-1 regardless of any seasonality.

We've also seen that it should be continum treatment, even though it's going to be a smaller dosage offered at a higher intervals rather than having initial treatment, losing weight, and then just quit using the drug. It's expected to have a continuous use of the medication throughout time. I don't think seasonality will be major, but based on data, we cannot really say anything.

Second part of your question about price. This is macroeconomic supply and demand again. There are two similar programs. [ Semaglutide, liraglutide ], but as there are various few competitors, they just got into the market with prices closer to the main agent, and they haven't got any relevant penetration yet. When new generic agents come into the market, there's going to be a higher [indiscernible] of price. As there are going to be similar agents, generic agents, naturally the reference agents will try to offer more attractive agents as we've seen for Wegovy.

What you've said in terms of projection in your papers are very good references. Maybe there would be a 20%, 30% drop. Maybe eventually, it will get to 50%. But rather than BRL 20 billion, it will be a BRL 50 billion market. I don't see anything differently from what I've read in your paper.

You talked about the second unit for free. The offer is the first treatment, the first spend of the treatment is offered for free. But if you buy the whole treatment, and of course it impacts somewhat. It's the first spend for free, not the second one. All the different papers, all the different publications in the market. They've emphasized a number of points. And I've just heard today, according to WHO, in Brazil, 50% of adolescents are already overweight. This is a different kind of audience, different kind of consumers. In GLP-1 what we have all been addressing is 1 million boxes being sold per month. Once additional needs are identified, the market will inevitably be extended.

Next question by [indiscernible] with UBS.

I have two questions. First, GLP-1 again. You've talked about the fact that you have 1/3 of share in the category. Considering the strong performance of same stores of 14.4%, has the share increase in the fourth quarter or not of GLP-1? Could you break down the share by molecule, [ semaglutide, dozipatide ], or at least tell us whether the share you currently have of Mounjaro is higher than 1/3?

Second, about 4Bio. You said that the sales would -- sale would generate BRL 60 million of income tax. Could you please tell us a bit more about the time you expect to monetize that amount? That would be great.

Our market share in GLP-1 drugs is difficult to track because of how intermittent it is. It really depends on your inventory of 2.5 grams and 5 grams. The competitors have an inventory while we don't have an inventory of those products and the other way around. And I am sure that in general, our market share is higher than 1/3, the 1/3 that you mentioned, be it in GLP-1 or Mounjaro. It is higher than that if you look at a longer track record. And we believe that it is going to continue to be -- so it is continue -- to continue to be higher than the competitors because we are closer to the consumers, and there is a discount [indiscernible] purchase the products online and our digital channels offer a better journey than the competitor's journey. So it's not just the fact that we have customers in the high income segment of the population, but also because we are present in digital channels. That's why we have that over share. And we expect the situation to continue.

Now about the BRL 60 million, it's actually simple. We have that amount to recover because of the shareholders' equity invested. We have -- we are entitled to that amount, the BRL 60 million. It was not monetizable before because we had deferred shareholders' equity. But after the transaction, we are going to be entitled to receiving that amount. And because of tax incentives, our shareholders' equity was completely detached from the investment of BRL 400 million. And now we will be able to recover part of that equity as income tax. And we estimate it is going to be around BRL 60 million. It could be a little bit more or less than that.

I think we have one last question.

The next one comes from Gustavo [indiscernible] with Bank of America.

Your online sales have been growing consistently, but still the pressure on gross margin is under control. I believe you gave us some indications of why that happens, including the increase in our market share from the app. But I would like to know more about the difference between your margins in brick-and-mortar stores and digital channels.

And also, I would like to know more about the flow of customers into your stores. Do you think the growth of sales comes from new customers, or maybe higher tickets, including GLP-1 drugs? Or maybe those customers come into the stores, trying to buy those products and end up buying other products as well? What do you think about that?

Well, we invested in HPC to be able to fund the promotions in HPC and we believe that the characteristic of digital customers is different from the average in the market. Those are not people who are just surfing the Internet trying to find the best prices and receive the products at home. Our app is usually used for convenience and also access to better prices. And that allows us to put the prices online closer to the brick-and-mortar prices.

And also, we have the [ Click and Collect ] initiative. The customers can purchase the products online and come to the store to get their products. And -- that's how we do it through the Click and Collect journey. And our delivery services are very different from the competition. We promised to deliver the products in less than 1 hour. And that's how we have been operating with very competitive shipping costs. We usually deliver the products in 40 minutes on average. And that's why we don't feel mandated to offer the best prices online because the prices are just part of the overall value proposition. And that's why the prices -- the difference of prices between the online channels and brick-and-mortar stores is not that large.

And also penetration of the GLP-1 drugs is very important. The penetration is 29%. If you look at GLP-1 alone, the online participation of those drugs is completely insane. If you look at the market as a whole, the customers usually originate their orders online. And that's why the growth has been exceeding 50%. And even if you exclude GLP-1 drugs, the structural growth in all segments online is still higher than the growth that we have in brick-and-mortar stores. And as a complement, it is important to highlight that the digital transactions are not just digital transactions with any customers. Those customers are recurring ones. Only 3% of our digital transactions base is done by customers that only buy online. That means that 97% of customers buying online also by other stores.

So the digital channels are just for convenience, the convenience of customers who are already engaged with the company and not really specific channels fighting against other specific digital channels. And that converts into LTV. We are giving customers more flexibility depending on the time where they want to buy a product, they can choose to buy online or at a store.

Also, the economics of the digital channels are very close to the economics of the stores. So the contribution margin of a digital transaction is basically the same, or very close to the contribution margin of a transaction at the store. So the digital channels will give us lower margin because of the prices that are lower. But that difference is growing smaller and smaller. The digital world also has a very light expense base because we just dilute the expenses that happen at the store. So at the end of the day, if there's a gap, it's basically, totally offset due to the expense dilution. So for us, it doesn't matter. We just want customers to buy however they want to us, it doesn't make any difference.

With that, we conclude the Q&A session for today. And now I would like to turn it over to our executives for their closing remarks.

Well, first of all, it is a pleasure for me to be here. I'm proud to be here reporting such great results, thanks to all of our employees who are behind these great results that we are reporting in Q4. It is record-breaking quarter for us. We grew by 23% on retail, which is not to be [ sneezed ] at. And not only that, we also gained 170 bps of market share in 12 months. We delivered a record-breaking NPS at the stores and also on the digital channels.

HPC went back to the performance, we wanted it to have. We diluted our G&A expenses in 50 bps in the year. We grew our EBITDA by 100 bps quarter-on-quarter and 50% year-on-year. So across the board, we delivered solid results. Having said that, we are not here thinking that we won the game and that we don't need to do anything else. We are confident we are happy. We have an understanding that these great results bear witness to our hard work, but we are committed to continue on this journey.

I was here in the difficult moments. And I was not here to give you excuses which are different from explanations. We gave you the explanations. We told you that the results were short of what we wanted the results to be. It was a reason for frustration for us and you as well. We shared our frustration with you. We were honest, transparent, and we told you what we were going to do. We tried to show you that the results were not on par with the company that we built over so many years. And the numbers are here. The number is compatible with our potential are here. We delivered them this quarter.

And I have the pleasure to be accompanied by the other leaders in the company, motivating them. But who actually delivered the results were the 72,000 employees, our biggest assets. And only we have such a great workforce. We don't have just one team. We have the team, that complement the assets that we built over the years. I am confident that there is still a lot of great things line in store for us. So we are going to deliver to the society and our shareholders. If you put together our assets, which are unique, we are second to none in terms of brand, culture, proximity to the customers. And if you add that to the strength of our team, and what the team did this year where we started and where we got, and we add speed, nobody else can do what we did. If you put together our assets and our team, we have a bright future ahead of us.

And if we add a third element, the lessons that we learned and how humble we were to learn the lessons and understand that we need to focus more on our core and the areas where we have the right to win, putting more attention to efficiency and capital discipline. If we add our team, the assets and the lessons that we learned and our focus, I'm sure that we are going to build extraordinary things going forward.

Thank you very much, each and everyone of you in our team. Thank you to the Board members, the controllers that helped and supported us in the difficult moments. And thank you, the investors, the shareholders, especially the ones that believe does in the moment of difficulty. The ones that were able to look past the results, snapshots, and we're confident that there was more to our story. You can count on my commitment, the commitment of those 72,000 people that work with us. We will continue delivering great results to you and the society as a whole. Thank you very much. See you in 3 months.

Hello, ladies and gentlemen, and thank you for standing by. Welcome to RD Saude's Third Quarter of 2025 Earnings Call.

The slide deck can be found at the company's Investor Relations website at ri.rdsaude.com.br. This conference replay will also be made available later at the website. [Operator Instructions]

Before we begin, we would like to inform you that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the company's management's beliefs and assumptions as well as on information currently available to the company.

Forward-looking statements do not guarantee performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur.

Investors should understand that overall economic conditions, the industry's conditions and other operating factors may affect the company's future results and lead to results that differ materially from those expressed in such forward-looking statements.

Today with us are Mr. Renato Raduan, CEO; and Flavio Correa, Head of Investor Relations and Corporate Affairs. I'd like to turn the conference over to Mr. Raduan. You may proceed.

Good morning, everybody, and welcome to our third quarter 2025 earnings call. It is an honor to join you this morning to give you more details of our numbers and help you interpret them.

And Flavio, first of all, good morning to you.

Hello. Good morning, Renato.

Flavio will be here to address your questions and give you more details as well. Well, first of all, I'd like to apologize because our release was published a little bit later than expected. So sorry for that. And now let's talk about the third quarter's results.

Before talking about the highlights, I need to tell you that we are very happy about this quarter. I remember that in the fourth quarter last year and the first quarter this year, I was transparent and humble and said to you that the results were lower than our expectations.

And I told you that we are going to turn the key in the second quarter. And now I have to tell you that we have solid results and we are very proud of that.

There are 3 factors that led us to solid results in the third quarter. First of all, we went back to the sales top line level. We were at a 12% growth and we told you at the time that we needed to go back to 14%. Right, Flavio?

And now we are at 15.5% in the core business, the retail business. So that is the first factor that we are very happy about in the third quarter.

And the second factor is the management of expenses. I believe that the market was positively surprised when we adjusted the costs in the second quarter, but people were afraid that the costs would go up again in the third quarter, but we managed to keep the same levels as the second quarter. We have a very healthy level of expenses in the third quarter and we need to be proud of that as well.

And the third factor, the most impressive one is a 7.5% EBITDA margin in the consolidated results. If you look at the track record for a third quarter, it should be about 6.9% to 7%. Last year, it had been 7.5% exceptionally due to nonrecurring one-off events. And if you were to exclude them, it would have been 6.9% to 7%.

So the top line grew, costs were under control and the structural EBITDA margin came to 7.5%, which is very solid, very consistent.

And now I'd like to delve deeper into the results. First, operational results. We finished the quarter with 3,453 units, 88 openings and 6 closures. Over the past 12 months, the expansion is at about 330 openings. But more important than that is quality. Our IRR is very healthy in the new stores. So this is one of the drivers that is keeping us moving ahead. And now we are almost at the level of 3,500 units in operation.

We reached 51 million active customers, 25% of the Brazilian population in the last 12 months. And we had 111 million tickets in the quarter.

And again, we're not proud of the number of tickets itself, but rather the quality of the service according to the customers themselves. You can see that the NPS is 91 and that's the customer saying that we are providing a great service quality.

And we had gross revenue of BRL 12 billion this quarter, a consolidated growth rate of 12.7%. And I'm going to give you more details about that on another slide.

We shouldn't just look at the weighted average of retail and non-retail businesses. The 2 stories are different. And I think that the main story behind this is the 15.5% growth in retail, very solid result with almost a 5 percentage point real gain in mature same-store sales.

We had a record-breaking market share with 16.8%, almost 17%. Over the last 12 months, it was one of the biggest number that we had with almost 80 bps in only 12 months.

And as for digital, we got a BRL 3 billion revenue. If you annualize that, it would be BRL 12 billion in digital revenue with a 62% increase in the digital business with a penetration of 27%. I'm going to give you more details about that later.

Our EBITDA was BRL 909 million, almost BRL 1 billion, in line with the growth in sales of 12.5%. The EBITDA was stable. The EBITDA margin was stable at 7.5%.

But we should remember that last year, we had one-off events. And in retail alone, it was 7.9%. Our adjusted net income came to BRL 402 million with a 3.3% margin, 2 percentage points -- 0.2 percentage points higher than last quarter and a free cash flow of BRL 648 million.

Now let me give you more details about our revenue. The consolidated number shouldn't be interpreted on its own. We need to break it down into the 2 stories here. First, retail with a growth of 15.5% and a drop in revenue of 17% in 4Bio. And what explains this drop is the fact that we had a pendulum effect.

We wanted to grow at any cost in the beginning, but then we told you that we wanted to balance things out. And now I think that we got a little too conservative in terms of growing sales to protect profitability.

But half of that drop is not even related to that. It is related to the laboratory that we used in the state of Sao Paulo for distribution through the distribution center in Sao Paulo. And the lab decided to supply products to the state of Sao Paulo through the state of Espirito Santo. And we don't have a distribution center there and that accounts for half this drop.

And that happened in the middle of the second quarter. We had that effect in the second quarter, but now it hit us fully in the third quarter.

And now we are signing a contract with a distribution center in the state of Espirito Santo to keep the supply coming to Sao Paulo, but also to use it for the other lines of 4Bio.

We already have an action plan in course to address that, signing a contract this week with a new distribution center and also because we need to balance things out.

And another factor here is the growth of 15.5%. I believe that we had some important wins here. If we look at last year, we had an increase year-on-year, but also quarter-on-quarter from the first quarter to the second and to the second to the third.

We were stable for 3 consecutive quarters with BRL 10 billion. And of course, in the first quarter, we have a negative calendar effect.

And revenue had become stagnant for 3 quarters. But now we can see that there was an increase since the first quarter of this year. And when we look at where this growth came for, of course, GLP-1 drugs factored in here, but not only that, we grew in HPC at 10.9%, which is a normal level.

We did not need to invest more than we were already investing in the second quarter. For HPC, we continued the same level of investment and the results are now better, almost at 11%. And last year, it had been 6% and 8%. We wanted to go back to double digit numbers. And now here it is.

And generics. Generics are not related to GLP-1. It grew by almost 20%, thanks to competitiveness and prices, but also it is related to the loss of a few patents. And when a patent expires, it benefits the generics, but it has a negative impact on the brand name medications.

And our own brand products grew by 21%, which is very solid. And GLP-1, to be very transparent, is beneficial to us. It helps us. But again, we earned it. Throughout our history, we positioned ourselves as the best store to serve the high-income segment because we always invested in a good experience inside our stores.

Some years ago, I remember that people asked us about the fact that we were so high income that we wouldn't be able to cater to the lower income segments as if it were a bad thing. But I believe that we found our way of catering to the lower income communities as well without losing that differentiating factor that puts us in a good position in the high-income segment.

And now we are reaping the benefits of that. We are going to see a very high market share in GLP-1 drugs. And we earned it, thanks to everything that we did in the past. So this is a very solid sales level, much higher than the past.

And that took us to an increase of 7.8% in mature stores. There's a calendar effect here. This is a record-breaking growth in mature stores. You can see here that we grew by 7.8%, almost 5% above inflation, much more solid than the growth posted in the previous quarters.

It's a very solid growth. And that takes us to an impressive level of BRL 1.2 million per mature store. And we have just about 1,700 mature stores that are selling more than BRL 1 million. So this is a very solid growth trend. And the last month in the quarter was better than the first, which points to growth as well.

When we go into the digital channel, we see 42% growth in our digital channels, getting to a penetration of 26.7%. There is also a point here with the penetration and sales of GLP-1, which is offering more attractive prices in digital channel. But even without this effect, all categories have grown at least 30% in digital channels and have got improved penetration.

GLP-1 analogs has improved our penetration numbers, but all categories have grown at least 30% in digital channels, extremely robust. Of the BRL 3 billion, 80% of it was from the app, which is a major strength of us and 97% of our deliveries are provided within 60 minutes. So convenience to our customers, which is really a landmark.

Customers are happier with our experience with an [ NPS ] in the app and also delivery, but we have 6 million digital customers. Of the 50 million customers, 30 million bought in the quarter, 6 million bought through digital channels and they represent 41% of our sales. Online sales, 26.7%, but digital customers who buy online, they amount to 41% of our sales. This is a very important strength.

When you have nearly 40% of your sales of customers who are used to our app, who are operating in the digital channels, they really benefit from that 60-minute delivery period, while having customers migrating to other competitors would be hard because they would have to have an excellent offer, really value proposition to make them migrate. So these are digital customers who are very well served by us.

Another important achievement in the quarter was the share, 16.8% with 18 bps of growth and we have gained share in all regions. Highlighted Sao Paulo here, it stands out. We've got 120 bps, highest rate of growth.

Southeast 70, Center West Midwest, 140 in the South, 20 in the Northeast and in the North, 60. Consolidated North, Northeast about 30 bps.

In Sao Paulo, there has been an increased growth because we expanded the opening of pharmacies in Sao Paulo. In the Northeast, let me find it here, it used to be 22 and then it went down. So this is part of our expansion strategy, but we have gained share in all regions.

Another point that I would like to make out of the chart is the 30% sell-in, sell-out share. We have 30% of share in Sao Paulo with Droga Raia and Drogasil. The second most relevant network in Sao Paulo would have 16%, 18% share. So there are 2 networks in Sao Paulo getting to 50% of market share.

In addition to that, there are some small players in different areas, but this is a highly consolidated market. It's quite hard for new incumbents, even for those that are already in the market with a relevant share with this kind of level of consolidation and strong brands, I would say that I don't believe competitors can benefit from any expansion of growth.

State of Sao Paulo amounts to 30% of the medication market. And the market is quite hostile to small players or new incumbents. And this is the kind of consolidation that we see in this region, but not in others yet.

Said that, I would like to hand it over to Flavio, who is going to talk about profitability and then I'll be back.

Thank you, Raduan. Now going into details about the financial results, let's go into gross profit. It was BRL 3.3 billion, 27.4% margin. Year-over-year, we are talking about margin dilution of 20 bps. But last year, 27.6% included the benefits of CMS of tax of 20 bps.

If we exclude that tax benefit, we are talking about stable margins year-over-year. And this is absolutely important. In 2025, we've had some tailwinds and headwinds concerning dilution because of GLP-1 analogs, which were more prevalent in the market and because of competition in HPC, which was really offset by other efforts and other initiatives so much so that we got to the gross profit in the half year, similar to that of the third quarter, which is something offline because of the effect before the CMED price adjustment. So we really should celebrate getting to such high gross profit.

Now talking about expenses. Selling expenses was 17.3% in the quarter. Year-over-year, we are talking about worsening of 20 bps year-over-year. But last year, we had also emphasized in our meeting that our headcount was higher and we hadn't really captured the expenses with the new headcount because they had joined the team later in the year.

We are talking about expenses normalized by the team that we had at that time in terms of personnel would be 17.5%. Comparing 17.5% with this year, we are talking about a normalized dilution of 20 bps, which is really important.

The expansion of headcount, we are talking about 16.5 people per store as of 15.9. It was 0.6 headcount per store, which really provides better quality of service and also work and engagement of our teams in the stores. This is really important.

Now analyzing G&A and this is the main achievement we have to celebrate, something that we have started capturing the second quarter and coming stronger in the third quarter. There was no rebound effect here. The SG&A in the quarter was BRL 310 million, which is less than the number that we had last year, which was BRL 323 million.

There was a significant dilution here of 40 bps year-over-year, going from 3% to 2.6%. There is a stability of this level quarter-over-quarter because of some specific pressures related with tax provisions and other things which are expected in the operation. Our expectation is to keep on improving our performance in this indicator.

Now going into EBITDA, which is a sum up of all the other elements. In a [ plan ] comparison year-over-year, we are talking about stability of EBITDA margin of 7.5% in this quarter, getting to BRL 909 million.

But if we exclude offset elements, 20 bps of ICMS tax and the 40 bps of personnel expenses, it would take us to a 7.5% performance as opposed to normalized values of 6.9% last year. Major achievement.

This specific quarter is the best third quarter we've reached in terms of percentage EBITDA in our track record since the COVID time. Major achievement.

Operationally speaking, in our cash cycle, there was a decrease in our inventory levels and an improvement in cash cycle of 3 days.

Now below the P&L, we have financial expenses, which was 1.6% in the quarter over last year, which was 1.3%. This increase is due to the increase in interest rate comparing those 2 periods. So this is the best explanation for this number.

It gets us to effective tax rate of 0.4% and this is a result of what we observed here at 4Bio. This rate, if we normalize it by the default number, we would get to 18%, which is exactly what we would expect as recurrent tax rate for the future, at least for the short and mid-term. And it takes us to BRL 402 million in adjusted net income or 20 bps increase year-over-year.

Once again, we are not considering normalization of the basis comparing last year in terms of headcount and tax, but still very good result.

And finally, this is free cash flow of BRL 558 million, very much aligned with what we expected, similar to what we used to have last year.

Our net debt went down from 3.9 in the second quarter to 3.4 in the third quarter with an improvement in leverage levels getting to 1.1x EBITDA over our debt. And back to you, Raduan.

Well, we've decided to have more time for your questions during this call. But here, let me just emphasize our confidence in the quarter.

In the first quarter of my management trying to explain what had happened, I had never thought that we would get to such a strong quarter. I knew that we had strategy to improve. I believe that the results would be better because I know of the strength and the quality of our management team. But in the first quarter this year, I wouldn't anticipate such fast recovery and I'm so glad to celebrate that.

It reinforces a number of our strengths. Yes, there had been a few financial and nonoperational deviations for 2 consecutive quarters, but we have really resumed our operational and financial strategy as a whole and performance.

We have now the mature pharmacies performing quite well, we are going to have an over share in GLP-1 agonist. It's here to stay. That's going to be part of our structure. But it also evolves HPC, something that we were all concerned about, also acceleration of generic medication. So I believe we've really resumed our operations to very good levels.

At the same time, despite that, we've been strengthening other elements of our operations. We've seen the amazing numbers of our omnichannel, which we've grown 62%.

And in addition, we offer a very good digital journey, 97% of deliveries made within 1 year. It's difficult to come up with a value proposition better than that if you don't have a good distribution and solid operations such as we do.

We have also shown that we can have an efficient management. We've managed cost without impacting deliveries, without impacting services or the corporate deliveries to pharmacies and the distribution center. We've proved that we can have very good operational management.

Losses are starting to decrease and we can see a downward trend, which is something that has impacted our gross profit. And while we were fast tracking and adjusting our operations, we have reached over 25% IRR, over 25% in all regions of the country. And we're still working on this wide distribution and logistics of our operations.

It's important to have presence and also to be located at the right spots or the right cities. It's not only improving operations and believe that's going to optimize sales forever. You have to be placed at the right spots to sell more. Otherwise, you are just going to be limited to the potential of that specific venue.

If you combine efficient operation and the best points of sale, then we can improve our operation.

Our company has very robust financial health. We have very robust results. We are improving our inventory levels, cash cycle, controlled leverage, which gives us the possibility of keep on investing where we believe we are going to make a difference.

And on top of that, we try to be as transparent as possible with all of you. We are not here to sugar coat things and sell a scenario that is more favorable than it actually is.

And when things are not so good, it is also our role to help people see what we see and that is added to all of the differentiating factors that we built over the course of decades with the right team and our execution capacity. And that is part of a perennial company, a company that is here to stay and all of that is built over decades and decades of hard work.

It is also impressive to see our ability to adapt fast. Maybe this year was the first year where we had to adjust things so quickly. And we managed to do it and the results of the third quarter bear witness to that.

And the market is going to continue to grow because the population is aging and also GLP-1 drugs and other medications that will come make the landscape for us very optimistic. We believe that there is a good trend that is leading us to the end of the year.

And with that, we would like to start the Q&A session. We'll try to address as many questions as possible. Thank you very much.

Just before we move to the Q&A session, there is one thing I always tell investors about. We were talking about how the entry point in 2025 was so tough with a lot of pressure on HPC and some other lines that were pulling our results down.

And our ability to react, as you said, was so important for us to go back to a stable level. And that is going to be our proxy for 2026, '27 and from then onwards.

This is a very important position in the retail pharmaceutical market in Brazil. It is a very solid thesis as well when we think about how the population is aging.

Now let's start the Q&A session.

The first question comes from Luiz Guanais with BTG Pactual.

I have 2 questions on my side, both about GLP-1 drugs. Raduan, if you could give us more color about the weight of GLP-1 drugs in your sales in comparison with the previous quarters? We can see that the number is increasing. It is getting to a high single digit or a low double digit. So that's the first question.

And the second question about GLP-1. I'd like to know the effect of them on your working capital. Are you planning an aggressive policy to installment payments -- related to installment payment on those drugs?

Please, Guanais, go ahead.

The second question is about working capital. If you can give us more color about the effect of the growth of GLP-1 drugs on your working capital? And if you plan to offer installment payment in this category since starting next year, we are going to see generics coming in this segment as well?

Well, the first question about penetration of GLP-1 drugs, your numbers seem correct to me. In the third quarter, we stood at a high single digit, not a low double digit. And in the past, it was 5%. Now we are higher than that.

And if you think about the potential of this molecule when we have a limited inventory, which didn't happen yet, I believe that we are going to move to double digit results. But in the third quarter, we were not there yet. But there's a huge potential. And obviously, when we see the generic GLP-1 drugs coming, the average price will go down, but access will increase.

I think this will eventually become a category on its own. Just like OTC, HPC, we are also going to have the GLP-1 category. That's how big the potential is.

And about your second question, we offer different payment methods for these drugs. In some cases, we offer a 6-installment payment method for customers. And by doing that, we can improve access.

Part of the population cannot pay all of that upfront in 1 single installment. But of course, we need to be responsible. We shouldn't just generate that demand and have problems in the future because of that.

But good news is part of the industry is helping us fund that payment installments because they want to increase access as well. And also, that puts pressure on receivables. But on the other hand, we are managing the inventory very well.

We decreased our inventory significantly. We have been doing that throughout the year. And we see more room to do that, to continue doing that.

It was a technical movement, a scientific movement even integrating departments and the impact on the cash cycle as a whole should not be that great because we have been decreasing the inventory coverage at the same time.

Just to add another point to this answer about the potential, the growth potential of this category, we're talking about 1 million consumers of GLP-1 drugs in Brazil per month. Out of the 215 million in our population, 1 million people are the target audience for that product.

And as the access increases, I'm sure that we'll be able to capture more of that. And we should remember that we have a very high market share in this category of about 1/3, which is very positive.

Now the second question comes from Joseph Giordano with JPMorgan.

I'd like to talk more about working capital. Over the past 2 or 3 quarters, we have seen an increase, an improvement and Raduan talked about the coverage of inventory. But I'd like to know more about the logistics.

What have you been doing in terms of allocating inventory in the different stores in the different neighborhoods? I'd like to know if there is more room to improve that side of the business.

And also about 4Bio, we saw a 17% decrease in your revenue in that segment. And you said that part of that is related to one specific contract. My question is, when you open the distribution center in the state of Espirito Santo, should we expect 4Bio to go back to its previous sales levels? So after the contract is signed, the financial loss would be lower. Is that correct?

About the first question about cash cycle, well, last year, considering the operating challenges that we had, they included logistics issues in some specific distribution centers, which led us to take a closer look at what was happening and also to improve our policies and inventory allocation.

And we realized that part of the problem with the DCs was an excess inventory, a buildup at some point in time for specific reasons.

And again, we had to be very humble to understand exactly what we needed to do to improve inventory management as a whole in procurement and also regular supply to distribution centers or the pharmacies themselves.

And we started that very strong movement led by Marcello, our COO, and he started to take care of the supply procurement and operation departments, bringing everybody together on the same commitment of reducing that inventory.

Now we have an inventory coverage that is 6 to 7 days lower than in the past with the same disruption level that we had. It's actually lower than the past 4 to 5 years. So we are actually improving the service to our customers with available inventory, but a lower inventory as a whole, which makes our operations easier. We are not going to have so many problems with expiration of medications and losses entailed by that.

So I think that our management did a great job and I'd like to take this opportunity to thank them for that. And there's still more to be done.

I believe that there are other levers that are very clear for us to improve the cash cycle, which is very important when the interest rate is at 15%. So we are going to see the benefits of that on our financial expenses, too.

Now 4Bio, indeed, the DC in Espirito Santo is going to help us. We are signing the contract and we are going to resume supply to the lab in the state of Sao Paulo and that is going to decrease the drop in sales and that should take place relatively fast.

4Bio is a solid business. It continues to make money and the projection for revenue is more than BRL 3 billion per year. Now that we are adjusting things, now that we are not so conservative in terms of protecting our profitability at all costs and after the operation resumes from the state of Espirito Santo, I feel certain that we are going to exceed BRL 3 billion in annual revenues.

Even without that DC, the third quarter had a better performance than the second quarter because of that balance movement. And 4Bio continues to be a good business with an annual revenue in excess of BRL 3 billion.

We restructured our operations, we divested in some other businesses and it was not the case with 4Bio. We decided to continue with it. And we just need to adjust things to go back to the levels that we expect to have.

And, Raduan, if we look at the gross margin in the company that is fed by 4Bio, of course, but other categories as well, I think the market gets a bit anxious about our gross margin throughout the year.

If we look at the potential dilution of our gross margin due to GLP-1 drugs and due to 4Bio as well, if you do the math, you are going to see that the sales are growing at about 12.5% and the gross profit is increasing by the same rate, 12.5%.

So despite the headwinds, we are still growing. Despite the potential dilutions, we are still growing. And if we have any additional performance that we can capture, we are going to distribute even more value.

So I think the results are very positive across the board when it comes to profitability.

And now the next question comes from Mauricio Cepeda with Morgan Stanley.

I have 2 questions too. First, about GLP-1 and the expiration of patents. Raduan said a few things that are in line with our thoughts about the competitive landscape after the expiration of the patents.

You said that there is low availability right now, but we also know that the national laboratories are going to start producing those drugs under licenses.

So in your perspective, do you think that with the low availability, the semaglutide price will continue to be high, at least in the beginning or maybe that won't be the case? Maybe the competition will be very aggressive.

And the players for similars and the pure generics, do you think that they are going to offer you more discounts than other players than what we see in the small molecule market?

And the second question is, you mentioned in your release that the market is going generic because it took advantage of the recent patent expirations and that helped you grow, especially in the prescription lines. But now looking forward, we can see that there's less opportunity in the generic space with the exception of semaglutide, but we can see less opportunities of losses of patents.

But do you continue to be confident in the contribution of generics and how much can it exceed the contribution of brand name medications? Because we can see that there are molecules that are very competitive. Some manufacturers have a huge capacity. So do you think that the unit contribution from generics will still be significant in comparison with the brand name medications?

I'm going to go with the first one. But I don't know the answer for sure. I know what everybody knows about theory. The more competitors you have in the market, the more the prices get readjusted and then price setters have to get readjusted.

Mounjaro in the market, for example, has taken to readjustment of the other molecules in the market so that they wouldn't lose their share. The more players in the market, as generics or as brand names, the tendency is to have readjustment of the reference brands.

But that repositioning of prices, which brings down the average ticket of the molecule because of generics or licensed products, in our opinion, it will be compensated by the increased access.

Another important thing is that there seems to be semaglutide as is and liraglutide and then there would be generics coming in, that will be it. No, the industry is still investing in innovation. So Mounjaro and all the product brands, the pharma industry is developing new products, reducing side effects, et cetera.

So much more than having one single product with a reference product, generic and similar product, there are going to be other molecules coming into the market with different price points and those who can afford will end up buying the most advanced drugs and the others will keep on buying the already existing ones.

We've already had 2 experience. There was the MS generic. We bought it. It's sold. MS could not replace the levels and now there is a licensed product by Europharma, which is available in the pharmacies.

But it all depends on medical prescriptions. Those products are not interchangeable. It's not simple, simply to replace the prescription. We have to work -- the doctors have to prescribe it.

In the short term, I don't think the average prices will go down. But eventually, as there are more products, more generic and licensed products, the prices will come down. But as a market, I believe there is still room for growth because of access.

And I think the most challenging one is the word that you are using for having the market go all generic, right? The Brazilian population consumes about -- 1 million Brazilians buy GLP analogs every month.

But we talk about 30% of the population having obesity. It would mean 30 million people who would fancy using the product in addition to the cosmetic aspects of the use of the drug.

I would say the market still has a huge possibility of growth. If the prices come down, we would have an increased demand. And generic medications, whenever a product expires its patent, there is an increase in gross margin when we start selling the generic. We have to find the balance point.

But in terms of cash, we are going to be able to generate more gross profit when the patent is expired and when we start offering new launches.

For other molecules and generics, we still have very healthy gross margin, similarly to our expected levels by having the highest market share. We are the main client of the generic manufacturers.

We have a very transparent open process. It's an auction of molecules as we call it. We have it every year, once a year or more frequently to know who are the ones interested in having a higher presence in our stores.

And the pharma industries offer the best conditions for these molecules so that they can be more represented on our shelves. Very well transparent process. The pharma industry is aware of that. And we have maintained very healthy, safe margins because of our network of over 3,500 stores. So very healthy margins.

That's great. I just have a quick complementation. What about the unit prices? The prices are lower. So is it still significant?

I think it's very solid and significant. This is not something that we see as a concern for our profitability for the future. In our round of discussions, we have had quite many to identify challenges and emphasize our strategies. This has never been considered a topic of relevance.

Let me now invite Irma Sgarz with Goldman Sachs.

I would like to go back to gross margin. Could you please tell us more about what you've seen in terms of gross margin, excluding GLP-1 effects and 4Bio? I would like to understand really the need to keep on investing in prices and the progress that you have had in the loss of products.

I would also like to know more about how we can understand the behavior of gross margin, discounting mix effects and what we can anticipate for 2026 for the fourth quarter and also Black Friday? It's a kind of promotional campaign that you haven't joined previously. And what about this year? Have you had anything in mind? Do you have anything in mind I mean?

First question, the most difficult one, right, this equation and this fine-tuning. If we exclude 4Bio, I think we have good news, as we pointed out. From the second to the third quarter, we've maintained our stable gross margin at corporate sales despite GLP-1 pressures.

The second quarter has higher gross margin because of the pre-price increase. The third quarter, despite that, we navigated quite well and we had almost 40 bps of negative pressure because of GLP-1.

But there were some other effects that contributed to our improvement. They had had a difference over last year, our distribution center in [ Goias ], where we are consolidating the loads to improve the service in our regional operations. It also impacts our gross margin and tax effects, price management.

We are still very competitive in HPC with the same level of competitiveness. But in other categories, online and offline, we've been very carefully adjusting prices product by product to have pricing efficiency gains.

We haven't invested more in the third quarter than the second quarter because of competitiveness. And still, we had better performance.

I haven't told you, but the performance of HPC was nearly 11% over the basis of last year that had increased 10%. We still haven't come across the low basis of HPC, which starts in the fourth quarter. The third quarter last year, HPC growth was 10%. This year is 10.9%. As of the next quarter, we probably are going to find lower levels.

Yes, there are pressures on our margins. HPC, we are operating at a stable margin, but offering more promotions than we used to and we probably will maintain it. But I believe our team is finding offsets to really maintain healthy margins.

Concerning Black Friday, we have told you very candidly that we were not as aggressive as we should have. And that was part of why HPC didn't grow last year.

Of course, we are much better prepared for this year's Black Friday campaign. Our team has been working with it since August with the industry, with suppliers. So we are highly optimistic and confident that the Black Friday this year is going to be much better than last year.

We are very optimistic for the fourth quarter, not because of the upward trend of the third quarter, but because we know the Black Friday is going to be much better than last year.

Let's go now into our next question. We have now Vinicius Strano with UBS.

One about selling expenses. How can we understand the future of selling expenses? What about personnel in your stores? And something else about hiring, do you still think there are investments to be made to work on selling expenses?

And in terms of inventory levels, what results from the higher turnover of sales of GLP-1? And how much of the inventory optimization has resulted from other strategies so that we can get to a normalized cash cycle?

Going to your first question. Selling expenses, as Flavio pointed out, we had a lot of suppression in the third quarter last year. We were understaffed as we stated and we have come up with an appropriate headcount, 16.5, to reduce the work overload of our own staff and to improve the quality of services. And it was an investment that made sense.

Part of the recovery of sales, self-service and recovery of losses resulted from the fact that we have larger teams in our pharmacies.

What hasn't been reflected yet, but it's going into the fourth quarter, is the fact that we are going to have that package of benefits for distribution center personnel and pharmacist personnel so that we can improve our employee value proposition so that we can have them more engaged, happier, reducing staff turnover.

We are launching a benefit, a package of benefit. We have heard our own people, managers, pharmacists, service operators, distribution center operators to know what would be the most relevant things for them so that they would be more satisfied and engaged.

We wouldn't invest in something that would make no sense to them. So we listened to their request and the packet of benefit is going into effect as of October 1. I cannot tell you exactly how much was invested, but we believe it's something that's going to be diluted within our financial results.

I still believe in the fourth quarter, we will have lower selling expenses than the quarter last year, of course, this is not guidance, despite all the improvements and also the improvement on our package of benefits. Once again, this is all going to be part of financial performances, which are equally good.

In terms of inventories, your question is quite good. Part of the reduction of cycle, say nearly 40% of the cycle reduction resulted from GLP-1, which has very high turnover. The sales turnover is quite high, but there is 60% of the inventory reduction which has nothing to do with GLP-1.

It's related to our structural work that had been done by the team, which is really improving our structure as a whole. And we believe there is more to come.

These are the 2 points. GLP-1, 40% of inventory improvement. The other non-GLP-1, 60% reduction.

The next question comes from Danniela Eiger with XP.

I have a few follow-up questions. The first one is about HPC. You were talking about competitiveness and I think that we can see that in our track record, you are more and more competitive and you're getting closer to the marketplaces, but the price comes at a premium still.

I'd like to know what your end game is when it comes to competitiveness. Do you believe you will have to stabilize the prices for some products? We can see that you are very aggressive in some categories. So I'd like to know more about your perspective about the HPC pricing dynamic and also if you believe that you are at a sustainable or maybe comfortable level.

And still about HPC, I have a question about Black Friday. You said that the performance will be better, but how much better? At the same time, we can see a very intense competition among the marketplaces.

So I think that marketing will be more expensive. So is your strategy focusing on the same customers with your own data pushes? If you could give us more color on your strategy, that would be great.

And a question about GLP-1. You said that you have not reached double digit numbers in that category. And you also said that the limited supply is a constraint, but we can already see a higher availability in the fourth quarter with higher doses, which also have higher tickets.

So maybe in the fourth quarter, we are going to get there in the double digit numbers. I believe that there will be an improvement. And in the previous call, you talked about the higher doses that you would receive.

So I'd like to know more about that as well. And very briefly, I'd just like to know more about the DC for 4Bio. When do you expect it to open in the state of Espirito Santo?

Well, first, about the relative price. We know that we don't have the same prices as the horizontal marketplaces and we don't think we have to. Many customers, many surveys have told us that we have strengths that the marketplaces don't have.

They have the price, but we have guarantee when it comes to the origin of the products. And customers know that in some products, that's very important. The customers, when they don't know the origin of certain products in marketplaces, they buy from us and they are willing to pay more for that.

And also, we have 60-minute shipping times, which no marketplace can offer. So we have other advantages, which allow us to have a premium price.

But of course, it shouldn't be that much higher. As you said, we are getting closer to their prices. And from the second to the third quarter, we saw performance going back to double digits.

And we believe that that is sufficient to sustain a healthy performance. If we put together the lower price, a price that is closer to the marketplaces prices and our benefits, the benefits that we offer that they can't, we believe that that is sufficient to sustain the performance. And of course, if we feel that we need to invest more on that at some point, we are.

You asked a very good question about the bloody war that will probably happen between the marketplaces during Black Friday. In the past, we had some similar wars, for example, free shipping. But what we can tell you is that we have an ambition to grow in sales.

We are going to do more things than we did last year. We have a target with some industries that we want to reach and those targets are much higher than last year with a negotiated margin.

So we are going to do our bit better than we did last year, but competition will tell what the end of the story will be. But we are confident that Black Friday will be better for us despite the red ocean in Black Friday.

And the next question was about GLP-1, about the doses, right? Yes. In the third quarter, as I said, we did not reach double digit numbers in that category. I think that will happen, but I can't tell you if it's going to happen in the fourth quarter.

I think it's going to happen even before the generics come or the licensed medications come. Once we have a full month with availability for all doses and all products, I believe that we are going to exceed double digits. But I don't know when it's going to happen because it depends on the industry, but I am optimistic about the increase in penetration in this category.

And the 4Bio DCs, well, they are smaller. They have 1,000 square meters in area and they require little automation. This week, we are going to sign the contract. It has been negotiated already. We already know the location.

And I was talking to the 4Bio CEO this morning because I knew you were going to ask that question. And he told me that we are going to sign the contract this week. And after it is signed, it is very easy to get it running because there's little automation. We just need to have the inventory there.

And another point that I would like to add about HPC. I believe last year, the competition against the marketplaces, it was stabilized because now we can show that we have benefits to offer.

I believe that we, in 6 months, were able to digest a headwind of 5 points in the speed of growth of this category. And we also are supported by the industry so that we can have a stronger footprint in this category.

Our growth thesis for HPC is very much based on that partnership. A partnership brings benefits and exclusive assortment that customers can't find anywhere else.

And we are omnichannel, which is critical for us. We have the beauty consultants inside the pharmacies. So all of those attributes are extremely important in this competition against the digital marketplaces. We don't think we are lagging behind at all.

Next question comes from Leandro Bastos with Citi.

I have 2 questions. The first one is about expenses. You said that you are going to offer more benefits to the employees. And I'd like to know more about your 5.2 journey. Are you going to implement it? We can see some competitors in the state of Sao Paulo running on this new mode of operation. So if you can talk more about that, that would be great.

And the second question is about the tax benefits. I believe that you had it in 3 states. So I'd like to know more about that. And what is the potential that you see in this arena?

Can you just please repeat the second question because the audio was a bit choppy?

Sure. Is it better now? It's about the investment tax benefit. You recognized the benefits in 3 states and I'd like to know a little bit more about that.

I'm going to answer the first question and Flavio is going to answer the second question. Yes, we are going to convert the pharmacies to the 5.2 mode of operation. And there is one thing related to this is the working hours.

The working hours add up to 44 hours per week. When people started working from home during the pandemic, the working hours remained the same. And the 5.2 is the same with 44 hours per week, but the employee has 2 options.

They can either come 6 days a week and rest for 1 day only with little time for personal -- their personal lives or they will come for 5 days, working a little bit longer each day. And the benefit on that daily effort is resting for 2 days instead of 1.

And again, we decided to listen to our people to understand if that's what they wanted. In some states, we have 30% to 40% of our pharmacists working according to that model. And last year, we converted all of our pharmacists to that model.

And still this year, we converted the supervisors as well. And we are in a transition phase right now. We had to listen to our employees to understand what was relevant to them. And on average, they decided to have the 5 days per week and to rest.

And we actually had a vote to understand the collective preference and 75% of the employees preferred that model of working 5 days a week.

So we are already converting the working hours to that model and we had to adapt and understand what time they should get there and what time they should leave so as to not impact customer service. And things are going well.

I think our employees are happier because of that. And that's why we are doing it. We're doing it for them. For us, it doesn't make that much of a difference because the 44 hours won't change, but we are doing what our employees want to be happier to have more free time to spend with their families.

And of course, it doesn't apply to everybody. Managers work in a different way. There are many particulars involved, but we are moving forward on this.

About the tax benefits, nothing changed when it comes to taxes. This quarter, we are using the same interpretation that we had in the previous quarters when it comes to tax subsidies and the differential tax in BRL 70 million affecting our results positively is a specific case from 2022.

We had some court decisions favorable to us being passed in the previous weeks. We were able to revert those numbers. Eugenio used to say that we are one of the very few companies that actually report on a lower revenue than it is in reality.

We usually don't report those numbers that come from subsidies. We are considering that these numbers came from the past and we are not including them in our numbers for this quarter. But yes, we had BRL 70 million coming from the subsidies.

Now next question, Robert Ford with Bank of America.

Congratulations on your excellent results. What's the impact of Ultra Farma issues in your market share? And how can we understand Ultra Farma from now on? In addition to working with 4Bio suppliers, are there any other benefits that we have to consider about the distribution center in Espirito Santo?

Well, thank you. Thank you for your comments and for celebrating our results. We haven't really measured the Ultra Farma effect and all the events that they've been involved in. But our market share in the state of Sao Paulo had been in place even before Ultra Farma issues.

We've been growing very positively in the state of Sao Paulo much before the problems they have had. The expansion of our new stores with very high IRR, mature stores. So we don't account for any growth resulting from Ultra Farma's issues because we've been growing like that very steadily for a while.

Espirito Santo's distribution center, we are going with a team there tomorrow to officially open our own distribution center of RD, fully automated and we would like to show you in future interactions, highly automated, very modern with robots, with less manual intervention in one single box, there might be a much higher productivity and lower operational cost. If it opens, of course, it's going to enable also a revisitation of current -- current DC and future ones.

4Bio distribution center is different. It's going to serve the pharmacies in Espirito Santo, part of the state of Rio de Janeiro, especially closer to the frontier of the state. So the distribution center is really important there.

We open about 330 to 350 pharmacies every year. We inevitably have to build one new distribution center every year so that we can keep up with our expansion. This is in Espirito Santos and there are others that are going to be opened in upcoming periods in different states so that we can keep up with our logistic challenges.

Now Rodrigo Gastim with Itau BBA.

I have 2 questions. First, going back to GLP. You've mentioned the expectations of market expansion once patents expire. But what about the economics aspect after GLP expiration?

I know it's hard to draw any conclusions yet. But what would you have in terms of gains? We know, yes, the generics bring different margins. But in terms of economics, what would be your best guess about future margins?

A second topic, in the opening remarks, you said in the first quarter, you didn't expect to be so well positioned now in the second half of the year. And my question is, what has happened that surprised you?

Could you please share with us the 2, 3 points that have positively surprised you in the past 6 months for taking us to that better position today? These are my 2 questions.

I'm going to give you my suggestion, but I don't think it's going to be any better than yours or anyone else's. We've been trying to analyze all data. We have a Board member who is a physician and we ask about perspective. Today, we are reading a McKenzie study to get more references.

But there is a consensus that once there is an increased access through generic, the demand will at least have a three or fourfold increase over the current demand of not 2024, but there should be a threefold increase over the references this year with an average price that would be cut by half.

It doesn't mean that our profitability is going to cut by half because they're going to sell more generic and so on. But all in all, we believe that the gross margin in cash generated by it in the total balance will be positive and better because of the multiplication of access.

We don't have the precise number, but we understand that total cash generated from GLP-1 will be higher despite lower prices, despite lower margins because of the expansion of access. Once again, this is my best guess, but the time will tell. This is what we've been learning and we talk a lot with the pharma industry to hear from them their perspective, but this is my best guess.

Now your second point, we have to be extra careful because very few people trust the company so much as I do. I've been in the company for 13 years. I know it quite well because of all the positions that I have taken.

I know the strengths, culture, the stores, logistics, expansion, qualification of the team, which has been really improved in the past 5 years, digital transformation. So all the things I've seen in the past 13 years have really assured me of the potential the company has for the future.

So when I say that in the first quarter and second quarter, I did not expect that much of results, not because I didn't trust the company or the team. No, I strongly believe in all of us.

But it was a great increase, BRL 10 billion to BRL 12.2 billion to structured EBITDA of 7.5% when the structured EBITDA for the quarter was 7%. You used to say we are priced to perfection. When we had a price to perfection, our EBITDA in the third quarter was 7%. Now it's 7.5% EBITDA with 50 bps over the previous situation of priced to perfection. So I think the intensity and the speed of growth have been marked.

And I think that despite our strengths, the pride of our history, our company has very candidly understand that sometimes for 2 or 3 quarters, we can get off track. Maybe we haven't operated as much as we could.

But we've recognized our mistake, humbly decided to make quick adjustments in cost structure, corporate structure, making the right investment allocations. And we've had made wrong investments, we wouldn't have had returns. It was a joint work of leadership, the support of the Board, our head office team and operations team really also by our site. And this is why we've reached so good results in the third quarter.

I think it's a result of our management capabilities and our assets. 2 or 3 deviated quarters are not going to really derail us. They do not ensure permanently good results and the numbers of the fourth quarter and first quarter of the year did show that.

But we had assets. We focused our energy, our best efforts, reinvested in value proposition, reinvested in propositions to our own staff. And as a consequence, we've reached good results.

Tales Granello with Safra.

I have a question concerning SG&A and your growth on the online channel, especially because of GLP-1 sales. In the quarter, it was 2.6 and that level of expenses will keep on be at this level.

But don't you expect to reinvest in digital as you did last year? Concerning the losses over income, the 10 bps that you had year-over-year and quarter-over-quarter, is it resulting from a reduction of staff? Or do you have better inventory management and right assortment? What has impacted that?

Excellent questions. The first one is really important. I would like to make a clarification. Reduction and restructuring of the company to operate lightly and more efficiently has not reduced our capacity to deliver. In the past 6 months, we have had the highest level of deliveries and releases in the digital channel despite the restructure. And why? For a number of reasons.

First, the team has become more mature, more seasoned, therefore, can work better. We've been working with generative AI to generate code and that has meant improved productivity and efficiency. As a team, we've brought together digital operations and direct business areas, developing things that can really make a difference to our customers.

This is an important question because we can make it clear that our corporate improvement had nothing to do or was not at the cost of impacting deliverables and also customer deliveries. Our NPS in the app is better than we used to have. Our NPS of delivery is better than we used to have. And we have a recurrence level, 66% of our customers. So 2/3 of the customers are recurring clients. They like the journey, so they come back.

We keep on investing in building our future, our ambidexterity. We have to be efficient in both channels and it requires investing in the future and we are being extra careful. We are going to keep on investing in digital channel, supporting the operation, but it doesn't mean that we have to go to a G&A of 2.8 or 2.9 or go back to the 3 point level.

Concerning losses, I think we have to combine a number of things. Some reductions of tests in stores, some specific actions to avoid shoplifting, also the products that got expired and we then have to get rid of and we've reduced that number of expirations. There is no silver bullet, I have to say.

This is the combination of a number of small actions. And when built together, they produce better results. And we are very confident that we can keep on reducing that. It was not just one action. It's a combination of a number of small actions.

We now are going to hear from Ruben Couto with Santander for the last question of our Q&A.

I've just -- you have online, you have Black Friday. I would like to hear your expectation, not for the fourth quarter, but for 2026. Do you think that's going to be additional investment source? Please tell us more about that.

Well, I'll start and Flavio can complement. I believe it's going well. It's growing more than we expected. It's growing more than the core revenues as expected.

And the growth will be double digit for a long, long time and [ Fabi ] and her team have been doing a great job and they have been making progress according to expectations.

We do have a good problem, though. If you look at our first slide, our EBITDA in the quarter was BRL 909 million, almost BRL 1 billion. In order for you to do something that is going to move the needle in a mass of BRL 1 billion in revenue, it has to be something extremely significant.

But it is a good problem to have. But we should remember that the business has always almost BRL 3.5 billion or BRL 4 billion per year.

Any additional revenue stream will help us. We continue to be very optimistic about this business. And any additional penny will help both on the revenue side and on the cost reduction side.

And Black Friday is going to be a good opportunity for us to leverage the push. It is a very good moment for us to get to a new level there. We have a different experience with some ads and we now have different interpretations on the impact of those ads and they are going to help us capture that share.

Just to wrap up, I believe that we are using AI more and more in our activities and that is helping us gain scale and depth in our deliveries. Fabi is leading that initiative together with a number of other departments in our company.

The ads are dealt with the entire business side of the company, bringing more value proposition than just ads alone. And with that, we are capturing an ROI much above the average in other companies or other service providers. So I believe we are going to have some tailwinds that will help us grow in this activity even further.

That concludes the Q&A session for today. And now I'd like to turn the conference over to the executives for his -- for their closing remarks.

Well, let me check if I have a slide about that here. I'd like to invite you to the RD Saude Day. It is going to take place on December 1. It is going to take place here in the headquarters from 2:30 to 6:00 p.m.

You will have the chance to meet all the executives, not just me and Flavio. So you're all invited. It will be a pleasure to have you here and talk to you some more about our strategies and everything we have been doing to build an even brighter future. So save the date and we hope to see you all here.

Some closing remarks. First, I'll repeat the obvious. Thank you. Thank you to everybody in our company. This result was extremely solid, as we said. And I am not the one responsible for that.

Everybody, the 70,000 people working in this company are responsible for that. 70,000 people working according to our culture, providing the best service to our customers in the pharmacies, in the head office, in our distribution centers, they are the ones that worked hard to deliver such great results in the third quarter, exceeding our expectations.

I think it exceeded your expectations as well. If you expected such a strong result in the third quarter, maybe that's because you regained the trust that you had in us. And we continue to be extremely confident and optimistic about the results in the fourth quarter and 2026 and from then on.

And again, I'll keep my commitment of being as transparent as possible in hardship and also in happy moments. I will always be here talking candidly to you without sugar coating the results, but rather speaking my mind.

And I continue to believe that the best is still to come. This company has been around for over 100 years. We have a lot to be proud of, but I am certain that what future holds for us is even better.

We had strengths, we have strengths that are difficult to replicate, a brand that was built over the course of 120 years with credibility, trust and a culture that is easily recognized by customers that cannot be built overnight.

And we are in the best locations in every neighborhood and that it cannot be replicated overnight. Not everybody can do that.

The digital capability that we invested so much in, many players don't have the financial capacity to do the same. The 70,000 people that work with us already have our culture and they are growing in their careers.

The managers used to work as pharmacists, the regional directors, the operation directors, they all started their careers here and that is very difficult to replicate too. International companies try to do that here in Brazil. They were not successful. Other pharmacy chains tried to do the same. They were not successful. So the marketplaces won't easily succeed either.

There are players that indeed have very strong assets. And if we keep working on our strengths and if we continue to have a sharp focus on doing what's relevant for customers and our employees, protecting the execution in the present and also looking at the future with the right speed, if we put all of that together, our assets and the capacity that our team has makes me truly believe that the best is yet to come and that we are going to celebrate many happy moments in our earnings calls and we will be able to make our society even healthier.

So thank you very much for your trust in us, for your interest in our results and see you in the RD Saude Day or the next earnings calls. Thank you.

Thank you very much for joining us this morning. This concludes RD Saude's earnings call for today. Have a good one.

[Statements in English on this transcript were spoken by an interpreter present on the live call]